Be Prepared - Market Analysis on May 7th, 2019

We've had a nice run off the December lows. If you were here at the time, you know what we were looking to the $4600-3000 long term fib zone to potentially give us a major bottom. So, far it has not disappointed. But now we are in an extended move off the lows, based on our 1-2 setup. While not likely complete yet, we are coming close. Further, extensions always make an asset very tricky. They gear up euphoric sentiment while continuing to make price action appear very healthy. A top can seemingly come without warning. 

Though, what I am more concerned about, is whether everyone can endure the pullback. I have a done a very extensive study on wave 2 pullbacks across a number of assets, and my finding is typically range from 1/2 the length of wave 1, to twice as long. Our wave 1/A will likely complete around 6 months from start. This means we can typically see a 3 month to 1Year correction. I highly doubt we'll see the latter but I cannot be certain. Further, in extreme aggressive corrections, we can see 6 weeks. Regardless of whether we see a long of short correction, be prepared for the worst. Even if you get out of this wave 1 profitably, it will try your patience. Just like our February wave 2, the subwave of this move off the December had many false starts, but look where we are. Until the market shows something different, I'll expect the same, and I'll expect sentiment on the board to go sour. Some will not be back trading cryptos, knocked out before the larger degree move. 

Bottom line is you need to prepare your mind for this. We've had it easy since December, but that will change soon. 

Ryan Wilday hosts the Cryptocurrency Trading service on ElliottWaveTrader.net.