Bitcoin Failed to Reach $27.5+/1K. Is That Bearish?

The Rally From The June 18 Low Is Complete

Over the last few weeks, see, for example, here, I shared with you that per the Elliott Wave Principle (EWP), I was

“tracking a leading diagonal (LD, green) wave-1/a pattern, which still requires a last (grey) smaller wave-v. For now, it appears wave-iv is still underway and should ideally find support in the $22,000-22,500 region. From there, wave-v should materialize, ideally targeting around $27,5K+/-1000.”

The cryptocurrency bottomed on August 4 at $22418 and rallied to $25203 earlier this week. See Figure 1 below. Thus, while the wave-iv, v sequence I anticipated almost two weeks ago materialized, it did not reach as high as I initially expected ($27.5K+/-1K). Is that Bearish? Allow me to explain below.

Figure 1. Bitcoin daily chart with detailed EWP count and technical indicators.

Five Waves Appear Complete. The Anticipated Pullback Is Underway

In my last update, I found, “Thus, all it requires for the Bulls is to push Bitcoin (BTC) above the late July high of $24676 to complete (grey) wave-v of (green) wave-1/a. The ideal upside target remains $27.5K+/-1000 when BTC breaks above that level as that is now resistance (in May, that was a support zone).

If BTC completes these five waves, the following more significant pullback (green wave-2/b) will be an excellent buying opportunity. In that case, I anticipate, based on the currently available price data, a low of around $22K+/-1K.”

1. Although $27.5+/-1K was not reached, the cryptocurrency did move above the late July high of $24676 this week, and thus -IMHO- completed (grey) wave-v of (green) wave-1/a. Check!
2. The anticipated wave-2/b pullback is underway. Check!
3. $22+/-1K has been reached. Check!

But since BTC did not reach as high as $27.5+/-1K and only got to $25.2K, the wave-2/b target zone must be adjusted lower. See Figure 1 above. I now expect wave-2/b to bottom around $20+/-1K. Since the rally lasted two months, the current correction should also take time. Since corrections consist of at least three waves, in this case, grey a-b-c, I expect BTC to bottom soon. That is then (grey) wave-a of (green) wave-2/b. Wave-b should then commence, followed by a final wave-c to complete wave-2/b.

When diagonals are complete, the price quickly drops out of them, moving back to the start of the pattern. In this case, the green target zone at $18.8-20.8K. Besides, the 76.40-61.80% retrace of wave-1/a is between $19.4-20.5K. Thus, there’s a good confluence between the two bolstering the case for a low around that area.

Lastly, I am always wrong till proven right. Thus, if BTC drops below the June 18 low, the two-month rally was a counter-trend rally, and $12K is still possible. As such, the current pullback is a low-risk buying opportunity where one can use the June low as a stop loss level.