Bitcoin Flatlined This Year: Part II

Bitcoin Elliot Wave Technical Analysis

Yesterday I showed that Bitcoin (BTC) has essentially flatlined year-to-date and how, from an Elliott Wave Principle (EWP) perspective, this sideways could become an elaborate triangle. As shared recently, see here, the other option BTC has is a more immediate downside setup to ~$25K. It should complete the enormous 4^th wave it is carving out before it is ready to rally to $100K+ for its next more significant 5^th wave.

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

A more straightforward 4^th wave potential

As stated in previous updates, 4^th wave corrections can take on at least 12 different patterns. Thus, knowing which it will be beforehand is impossible, and knowing which it is when the correction is underway requires the availability of more price data. BTC is now at the stage where we can start to minimize our options and focus on two. The triangle was discussed in detail yesterday, and today we can focus on the completion of a simple zig-zag: a-b-c; 5-3-5. See Figure 1 above.

From its November 2021 all-time-high into the mid-January low, BTC completed wave-a. The subsequent multi-week bounce was a three-wave b-wave. 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.

Later this year, a possible tag of the 200-week simple moving average (forwarded in time with the dashed red line) would be an ideal setup. But it is not necessary. The c-wave can morph into an overlapping ending diagonally, but the ultimate and perfect downside target remains about $25-27.5K.

Besides, note how the money flow indicator (MFI14) has increased since the February lows. Thus at this stage, believe it or not, money is flowing slowly back into BTC.

Bottom Line

BTC is in a multi-month 4^th wave correction of the same degree as the wave that ended in 2018 after the 2017 top. Fourth waves are tricky and can morph into at least 12 different patterns. Now that more data has become available, I can narrow it down to the two most likely. In yesterday’s update, I discussed the triangle. In today’s update, I show that BTC’s setup can also support a more immediate downside setup:

1. Stay below last week’s high ($42997) and especially the late-March high ($48208).
2. Close below the February low ($34350). That opens up the potential to target $28-30K.
3. Close below the January low to confirm the impulse pattern’s ideal downside target of $25.-27.5K

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.”