Two weeks ago, I showed you that Bitcoin (BTC) had two options “Pay me now or pay me later.” Back then, I viewed BTC as “either … setting up as a -in Elliott Wave Principle (EWP) terms- nested one-two set up or it is topping out. The difference between the two options is simple: breakout above the mid-August high ($50514), … or breakdown below the recent lows at around $46245 to target $40-44K. From there, BTC can then start its rally to $90K.”
The cryptocurrency did throw a curveball*, as it broke above the $50514 high, rallied to as high as $52919, and then plunged essentially in one day down to $43500. It certainly caught me on the wrong side, but that is why one always has stops in place, as there are no guarantees in the markets, and one always has to adhere to rule number one in trading: minimize your losses. The “pop and drop” pattern into the original $40-44K target zone clarifies things. Allow me to explain below.
Figure 1. Bitcoin daily charts with detailed EWP count and technical indicators.
A Revisit of 29K is still possible
All corrections consist of at least three waves: a, b, c. See Figure 1A. Corrections are either 2nd or 4th waves. Allow me to explain. BTC topped out on September 7 at $52919 and lost 17% intra-day (red, intermediate wave-a). Then it rallied in an overlapping fashion to $48788 on September 17 (red, intermediate wave-b) and then dropped yesterday and today again to $40213 (red, intermediate wave-c). In this case, today’s low (wave-c) equaled almost precisely the length of wave-a measured from the top of wave-b (red arrow).
This length is a typical relationship for what in EWP-terms is called a zigzag correction. Besides, BTC has retraced almost precisely 50% of the rally that started in June at today’s low. In this case, I count that rally as a more significant 1st wave (black, major wave-1) as it can be assessed as having made five waves up (the five red, intermediate waves i, ii, iii, iv, and v). The current decline is then major wave-2, which could have been completed as there is now the required minimum of three waves down with a classic internal relationship. The 50%, as mentioned earlier, retrace of wave-1 is also typical for a 2nd wave.
However, Figure 1B shows the BTC Bulls are not out of the woods just yet, as the September 7 high at $52919 could also have been a more significant b-wave bounce. That means the cryptocurrency is now working its way down back the $29K region for a c-wave of a more enormous (blue) Primary-IV wave. Remember, corrections are always at least three waves, and in this case, I assess BTC having topped in April and not in March as with the Bullish option. This bearish option then allows for three waves: wave-a to the June low, wave-b to the recent September high, and now wave-c is underway. A further breakdown in price, especially below $37220 towards the shown 161.80% extension at $33255, will make this option my preferred path.
The Bulls would need to see BTC hold above $37220 and see a rally back above Saturday’s $48788 high to tell us the current three-waves down pattern have completed and a retest of $53K is in the cards. From an EWP perspective, BTC will ultimately have to break above $56K to know that larger wave-3 is underway. But, before that my indicators will have moved from down to up, from sell to buy, and my automated crypto trading alerts will have given a buy signal long before that as well.
Bottom line: Bitcoin’s price chart still has a bearish potential that can target as low as $29K before the run to $90K+ finally gets going. A continued move down towards the mid-30Ks will undoubtedly increase those odds. However, my preferred view remains that BTC has bottomed and is now working through a corrective 2nd wave that sets it up for the next launch to $75K. A breakout above Saturday’s $48788 high tells me the current three waves down pattern has been completed, which increases the odds of a new impulse higher tremendously.
*Please remember, my work is ~70% reliable and ~90% accurate. Plenty enough to give my premium crypto trading members an edge. But we must, therefore, have realistic expectations and not expect perfection and zero bad calls in a dynamic, stochastic, probabilistic environment. Therefore, all we can do is “anticipate, monitor, and adjust if necessary.”
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