Sudden trend changes can be shocking – here’s one way to try and turn lemons into lemonade
It's like something out of a daytime soap opera. The world's favorite "It" crypto coin was shot down last week as it hemorrhaged a massive 13% sell-off in a mere 24 hours.
According to the mainstream "police," the armed gunman was none other than Wall Street giant Goldman Sachs. Or, more accurately, a September 5 Business Insider report that Sachs was ditching its plans to open a crypto-trading desk due to "factors beyond [its] control."
Confirmed a September 6 Fortune article:
"Bitcoin Bloodbath: News from Goldman Sachs is Behind Today's Plunging Prices. As is sometimes, but not always the case -- the reason is pretty clear... The latest crash began Wednesday after the Goldman news broke, but it accelerated into Thursday."
Suspect identified. Smoking gun. Case closed!
Or, not. It's a fitting explanation -- but like other similar explanations based on market fundamentals, this one is one step behind the market. For traders and investors, it's much more important to identify price turns in advance. On that, Elliott wave analysis often is a better alternative.
On September 4 -- one day before the Sach's report broke -- our Cryptocurrency Pro Service identified a bearish Elliott wave setup on Bitcoin's price chart:
"While there is no evidence a top has been established, the pace of the rally has slowed to a crawl and that might signal it is mature. The proximity to the [Fibonacci] 61.8% retracement target sends a similar message. Weakness beneath 7229.94 would hint a reversal has occurred."
As you've just read in the analysis excerpt above, this forecast was more than just a lucky guess. The market often reverses when it hits Fibonacci price targets, plus the Elliott wave picture was showing a mature rally as early as September 4.
All market forecasting is about weighing probabilities; there are no guarantees. Yet, Elliott wave analysis will always help you see in which direction the weight of the evidence tips the scale.