Elliott Wave Analysis

[bitcoinBull]

Edit:  former title "Elliott Wave Educational Video Series", a series of seminars by Robert Prechter recorded over a decade ago.

In the first session, Prechter gives a fascinating historical perspective on economics: why Wave I from the 1932 DJI low topped in 1937, and started correcting (Wave II) from 1937 to 1942.  Because, it looked like the Allied powers were going to lose WWII to the Axis powers (in other words, capitalism was losing to communism).  When the Allies started winning in 1942, the Dow resumed the upward trend, starting the largest and most powerful Wave III of the Elliot Waves.


http://stockcharts.com/freecharts/historical/djia1900.html - Dow historical chart


Analagous bitcoin chart?

[1714861935]

1714861935

[1714861935]

1714861935

[netrin]

Thanks for the video links. While we're cross linking, I'll just drop this old thing here:

Discuss.


Bitcoin wave V (April-June 2011) is definitely longer than III, which is a semi-unique feature of commodity charts. I don't expect a similar wave V extension from the DJIA. I think the Euro-American stock markets have peaked.

[netrin]

Video 1. Hour 1:00:20-40 "A correction usually finds its lowest point in the area of the fourth wave of the preceding impulse wave of the same degree."

[bitcoinBull]

Video 1. Hour 1:00:20-40 "A correction usually finds its lowest point in the area of the fourth wave of the preceding impulse wave of the same degree."

Blood.  Thirsty.  Bull.

Think you could stomach $0.75 now? 

Baron Rothschild, an 18th century British nobleman and member of the Rothschild banking family, is credited with saying that  "The time to buy is when there's blood in the streets."

He should know. Rothschild made a fortune buying in the panic that followed the Battle of Waterloo against Napoleon. But that's not the whole story. The original quote is believed to be "Buy when there's blood in the streets, even if the blood is your own."

Buy When There's Blood In The Streets

[netrin]

Could you apply EWP to this well known asset before 2000?

[netrin]

Think you could stomach $0.75 now?  

I have no love for vampires, but neither am I long bitcoin.


I don't trust < Daily resolution, but none the less, I see three upward impulses since Thursday and am concerned that today we're in a c followed soon by a strong up wave III. What do you see in the crystal ball?

[sadpandatech]

Think you could stomach $0.75 now?  

I have no love for vampires, but neither am I long bitcoin.


I don't trust < Daily resolution, but none the less, I see three upward impulses since Thursday and am concerned that today we're in a c followed soon by a strong up wave III. What do you see in the crystal ball?

  I don't think we've hit our II yet for the time period stated....  "I see three upward impulses since Thursday"   I don't think it fits this yet; "..the preceding impulse wave of the same degree"  Though admitedly I have not looked at it as carefully as you likely have.?

  Cheers

[netrin]

I don't think we've hit our II yet for the time period stated....  "I see three upward impulses since Thursday"   I don't think it fits this yet; "..the preceding impulse wave of the same degree"  Though admitedly I have not looked at it as carefully as you likely have.?

This pink wave '4' should be a three wave corrective (ABC). The 5 waves I'm referring to are on an even smaller scale (A). To be sure, I don't trust anything less than a DAY in bitcoins. I posted the above link on the 24th before the little fall. I'll update it so it doesn't keep moving.



What I see (on the seven day chart) is the bottom pink '3' on the 19th at $2.05. We've moved up in three impulses forming an A night of 22 at almost $3.3. Then we've fallen into B. I believe we completed B last night at $2.5 and are moving up on the final C to my pink '4' which will not likely be higher than pink '1' in September.

But again, I have never trusted the hour/day scales. We could just as well have hit pink '4' at $3.3 and are on our way down to '5' at (gulp) $1-ish. We'll see in the next 12-24 hours.

[sadpandatech]

I don't think we've hit our II yet for the time period stated....  "I see three upward impulses since Thursday"   I don't think it fits this yet; "..the preceding impulse wave of the same degree"  Though admitedly I have not looked at it as carefully as you likely have.?

This pink wave '4' should be a three wave corrective (ABC). The 5 waves I'm referring to are on an even smaller scale (A).

  Looking at it I see what you are saying and you are probably more than accurate, atleast in the wave methods you are using. I can assure you, my understanding of this is WELL below what yours is. ;p

  I think I pretty much ignored your labeling and was refering to II. a. '2' as if it were labeled differntly. I.e., II. a. 1, 2, 3,,, all being the through and using the same but with II. b. 1, 2, 3,, as being the peaks.

  Back to your proper way of reading it, I see where pink '4' not breaking $3.3 could suggest the pink '5' will be so low.  I suppose the only real hope in that situation is that pink '4' has not hit yet and will break $3.5+?...

  Thank you in advance for entertaining my very vague understanding. Hopefully your explanations will help others that may be in the same posistion as me, not so familiar with these methods but willing to keep an open mind and learn.

   Cheers,
     Derek

[netrin]

As I understand Elliott, the only requirement we have for '4' is that it can not rise above '1' at $4.2.

[netrin]

I'm not sure why there should be a relationship to the golden ratio, nor whether there is a relationship. No matter how I slice the numbers for wave 'iii' and 'v', I don't get within 5% of the golden ratio.

I've just came across a collection of realtime EWP on youtube. One thing she says often is that if wave three expressed a Fibonacci relationship, then five is not likely and vise versa. I haven't yet applied that rule, but what do you guys think?

I have a suspicion though that this is just mathematical slight of hand. The golden ratio asserts that x/y = 1±y/x, so given two wave pairs it seems highly likely that at least one will express either 0.618 or 1.618 within a small factor. Then, you'll often hear "usually equal to or greater", which seems to allow for absolutely any relationship at all, no?

[netrin]

you are probably more than accurate ... my understanding of this is WELL below what yours is ... your proper way of reading

You flatter me.

I see where pink '4' not breaking $3.3 could suggest the pink '5' will be so low.  I suppose the only real hope in that situation is that pink '4' has not hit yet and will break $3.5+?...

'4' must be lower than '1' and '5' must be lower than '4'. Otherwise, '4' doesn't tell us much about '5'. I don't know what you mean to imply by 'hope'. Do you want a rally or are you shorting?

Pink '4' could be anywhere. I haven't labeled waves in the previous higher degree (the missing black in pink wave '3') but I suspect 3:iv could be appropriately close to $4. Likewise, wave c:5 could end anywhere, though our March wave 'IV' puts it in the $0.6-1.1 range.



Pink wave '2' probably should be shifted to the left (two days after '1') which forms a strong three wave correction up. Then 3:iii would be extended, 3:iv would ride along $4 with a powerful 3:v down.

Another count puts wave 3:iv on 17,18 October, which would hint that wave 4 is just about over today.

[sadpandatech]

you are probably more than accurate ... my understanding of this is WELL below what yours is ... your proper way of reading

You flatter me.

  You deserve it. I admire those of high intellect who put in the effort to work their own proofs. And those willing to share and teach.

I see where pink '4' not breaking $3.3 could suggest the pink '5' will be so low.  I suppose the only real hope in that situation is that pink '4' has not hit yet and will break $3.5+?...

'4' must be lower than '1' and '5' must be lower than '4'. Otherwise, '4' doesn't tell us much about '5'. I don't know what you mean to imply by 'hope'. Do you want a rally or are you shorting?

  Thanks for explaining that. By 'hope', I was simply hoping that the numbers would hold true from a mathmatical viewpoint. Just to be clear, I have not engaged Bitcoin as an investment vehicle but would prefer a rally if it is caused by new money moving into the system and not a speculative bubble. Any movement in any direction leading to some sort of eventual equilibrium would be great.

Pink '4' could be anywhere. I haven't labeled waves in the previous higher degree (the missing black in pink wave '3') but I suspect 3:iv could be appropriately close to $4. Likewise, wave c:5 could end anywhere, though our March wave 'IV' puts it in the $0.6-1.1 range.



Pink wave '2' probably should be shifted to the left (two days after '1') which forms a strong three wave correction up. Then 3:iii would be extended, 3:iv would ride along $4 with a powerful 3:v down.

Another count puts wave 3:iv on 17,18 October, which would hint that wave 4 is just about over today.

  I will not add anything here as it would be pure guesswork on my part. I am still following along intently and will hopefully increase my grasp of the concepts enough to fully understand before you are done here. =)  I do have one some questions about some of the slopes. Are the gradients of pink '2' to '3' and '4' to '5' the same? And the gradients from pink '1' to '2' and '3 to '4'? Is this a requirement to fit into EWT?
  I lied, one input. "which would hint that wave 4 is just about over today." If i am following correctly I agree, and it should nudge 4 to within +-.1 of $3.00.

  Thanks again for sharing this. Eventually I will free up some brain cycles and go check out the vids so I can follow along better.

    Cheers,
       Derek

[netrin]

I'm afraid the blind may be leading the blind or the doubter leading the faithful. I'm not even convinced I believe Elliott works (rather than any method which encourages looking at multiple scales, patience, and planning for negative confirmations). I am only posting my charts because I want to learn myself and welcome critique.

I appreciate your comments and questions. Just be aware that I do not consider myself to be experienced enough to give definitive answers; I can only explain my own thinking. I still have no clue what is happening during most corrections (such as pink '4' this past week, Monday's wave 'b' in particular) until they are long over.

I no longer share your 'hope' for bitcoin. I am convinced crypto-currency will prevail. Bitcoin prices are volatile. That is a fact and won't change. I love bitcoin technology and I enjoy trading this volatile asset. They are two entirely separate entities which share few properties. I also believe bitcoin will rally and pop many more times. I believe bitcoin will hit triple digits in 2012. I don't hope that, I expect it, while preparing for zero.

Are the gradients of pink '2' to '3' and '4' to '5' the same? And the gradients from pink '1' to '2' and '3 to '4'? Is this a requirement to fit into EWT?

Great question. I appreciate symmetry and have a tendency to create symmetry. But I believe that is wrong according to Elliott (who uses different symmetries, Fibonacci, etc). I understand that in a five wave impulse, an orderly correction (2) will often be followed by a chaotic correction (4) and vise versa. I think you'll see that is true in II (November) and IV (March). I now favor an earlier pink '2' ending 12 September, but wanted to make my graph consistent with the graph I created at that time (and posted last week).

Also, I am tempted to believe that pink '4' can not reach $4 because it would have to rise well above the clean monthly resistance. Is that unorthodox thinking?

 I lied, one input. "which would hint that wave 4 is just about over today." If i am following correctly I agree, and it should nudge 4 to within +-.1 of $3.00.

We just bounced over $2.9 hit on 18 October. If my count is thus far correct, and we sustain prices over $3, then I think we are in a five wave impulse from the bottom 25 October to which $4 is a real possibility. This could be interesting:

[netrin]

So, we didn't quite make $4, but $3.85 was pretty close and well within 3.iv (8-12 October). Notice that today 30 October, we've hit $3.2. On 23 October, 3.a peaked at $3.3. So, for all the rally bulls, either this little correction is gonna turn into an impressive third wave extension, or we've peaked at 4.c.v on our way down.



As I explained here and here, the green count (below) considers the unlikely case that the invalid fourth wave forms part of a massive upward impulsive third wave extension. The red count (below) is much more likely. I only considered the green count in response to 'what if?' questions.

[sadpandatech]

So, we didn't quite make $4, but $3.85 was pretty close and well within 3.iv (8-12 October). Notice that today 30 October, we've hit $3.2. On 23 October, 3.a peaked at $3.3. So, for all the rally bulls, either this little correction is gonna turn into an impressive third wave extension, or we've peaked at 4.c.v on our way down.

  Very interesting. And I am still following intently. =)  I finally broke down and whipped out Ninja and G-bot (only ones I know that are cheap to free and not locked into predefined data brokers, etc, in order to give me more reason to follow all this a bit more closely. I have yet to check if there any pre-existing EWT scripts to run simulations off of though.

[netrin]

We are in a fourth wave correction since Monday (II.5.1.iv red), and no matter the outcome of these bounces, I expect bitcoin price will drop below $3.

So what kinda of correction are we experiencing this week? A rare inverted widening triangle stretched out over many more hours, days or a common flat correction? If 'd' confirms this as the fabled fourth wave inverted widening triangle then 'd' along with 'b' defines the base line (the base line I've drawn is only suggestive). We'd expect 'd' to drop much lower than 'b' so that 'a-c' and 'd-b' are symmetrically divergent. The price of 'e' is not predictive and may even extend beyond 'a-c'. The thrust is measured as the perpendicular between the ends of lines 'a-c' and 'b-d' through 'e'. The fifth wave should be at least the thrust distance down from 'e'. Unless extended, I do not believe this is flat, because wave c's three waves do not look impulsive. A flat is 3-3-5-DOWN or extension. An widening triangle is 3-3-3-3-3-DOWN or extended. My guess is either this formation continues bouncing above $3.06 many times more, or we drop down to $3 or below, bounce up for 'e' and drop phenomenally thereafter. As of 18 UTC, it's ambiguous, but I expect a drop or bounce confirmation before I ski off the grid tonight. No matter how it bounces, bitcoins are dropping below $3.

[S3052]

As promised, some feedback on your EW count.

Overall, I see the longterm wave count the same (I: big rise from Aug '10 to Jun '11. II: correction Jun '11 to date, III: huge rally once II is over).

The only small issue is that the wave II correction can not be counted exactly that way.

Wave a can't be counted in 5 waves and this is why the current c wave will also not be a 5 wave move. Wave II is not a simple a-b-c zigzag, but rather a more complex correction, i.e. a "double three".

[netrin]

Wave a can't be counted in 5 waves and this is why the current c wave will also not be a 5 wave move. Wave II is not a simple a-b-c zigzag, but rather a more complex correction, i.e. a "double three".

Interesting. Do you think you could line up some of those points A, B, W, X with dates? The 12 June hack and sell off certainly messed up the trend

[netrin]

While this (past?) week like most corrections has befuddled me, the downward meaning remains the same. Likewise, I have at least two alternative counts for the past week (no, BTCurious, none of them include a continuation of the corrective rally since 19 October). The hourly count (green) is typical bitcoin noise. Since Wednesday, I've recounted red iv as magenta ii, and the previous black 2 is now magenta iv. Neither count changes very much. We're trending down in all scales (seasonal II, monthly c, weekly 5, daily I, and magenta as either iii or v are both down).



I'd be surprised to see a jump above $3 again for weeks. However, if that were to happen in the next few days, I'd say we're still in magenta ii (or iv Wednesday count) but the chart remains the same, just shifted forward for a longer round of bouncing.

I believe S3052 is correct. My long term chart is technically invalid on the seasonal (II.a) scale. I considered the Mt. Gox hack to be invalid data. But I suppose that is not honest. It was a real event with major price implications. I'm still working on an alternate count. My eyeballs would make my old red b wave, S3052's X wave, and the implications could be more miserable than I have projected. We've got weeks before that would come into play before which I'll have a new yearly chart. Stock up on some rotten tomatoes. Thanks S3052 for the feedback. I appreciate it.