Bitcoin Elliot Wave Analysis
Two weeks ago, I shared that Bitcoin (BTC) had essentially flatlined and how, from an Elliott Wave Principle (EWP) perspective, this sideways price action could become an elaborate triangle (see here). Or it could turn into “a more immediate downside setup to ~$25K … to complete the enormous 4th wave it is carving out before it is ready to rally to $100K+ for its next more significant 5th wave.” (See here and here). And I presented a three-step process :
“Stay below last week’s high ($42997) and especially the late-March high ($48208).
Close below the February low ($34350). That opens up the potential to target $28-30K.
Close below the January low to confirm the impulse pattern’s ideal downside target of $25-27.5K.“
Thus one had clear if/then parameters in place, which could be used as stops, as over the last two weeks, BTC did all of these three items and reached the 3rd wave target zone: it bottomed at $25838 today. See Figure 1 below.
Figure 1. Bitcoin Weekly chart with detailed EWP count and technical indicators.
The more straightforward 4th wave potential materialized.
As stated in my previous update, “BTC is now at the stage where we can start to minimize our options and focus on two. The triangle … and … the completion of a simple zig-zag: a-b-c; 5-3-5. From its November 2021 all-time-high into the mid-January low, BTC completed wave-a. The subsequent multi-week bounce was wave-b. Now the cryptocurrency should be completing the 5-wave c-wave. Last week it already topped right in the ideal (red, intermediate) wave-ii target zone and is currently trading below the tentative but preferred wave-i low. Thus wave-iii should now be underway, followed by iv and v, as shown in Figure 1.”
All of this has come to pass, except for the wave-iv and v. Shorter-term, i.e., over the next few days, BTC can still wrap up some smaller 4th and 5th waves (of the minute and minor degree) to complete the higher-degree (red) intermediate-iii wave, but technically wave-iii has done enough. Thus, it is time to start looking for that wave-iv bounce to ~$34+/-1K, which should be a multi-day event.
Because of the EWP, we know waves four and five come after the third wave. Thus, when wave-iv is complete, BTC should do one last stab lower for wave-v to ideally ~$24+/-1K. That will then have washed out even the most stubborn Bulls and allow BTC to get ready for its next Bull run.
Bottom Line and Bitcoin Price Forecast
Two weeks ago, I concluded, “Thus the stage has been set. The conditions are in place for a more direct route to the downside. All BTC must do is provide the triggers according to the aforementioned “three-step program.” BTC complied and triggered each step, which for traders can be used as binary if/then parameters, e.g., stop (loss) levels, and the forecasted $25-27.5K region has been reached.
So far, so good, no surprises. I, therefore, prefer to look for a multi-day bounce back to ~$34+/-1K soon, with the lower end preferred, followed by a final stab lower to ~$24+/-1K. That should then complete a much larger-degree 4th wave correction and allow BTC to start its rally to $100K.
This article was originally posted on FX Empire