Bitcoin’s Counter-trend Rally Is Underway: How High Can It Fly?

Bitcoin Technical Analysis

It has been four weeks since I shared an Elliott Wave Principle (EWP) based update on Bitcoin (BTC). See here. Although BTC broke below $40K, it did not reach as low as $28100-31760 as I thought it would but bottomed at $37191 instead, showing one cannot forecast every move correctly.

However, this meant the mother of all cryptos would be stuck between $34.3 and $44.3K for an extended period, as I pointed out here. I then showed that a breakout above $44.3K would -based on a simple symmetry- target around $54.3K. The breakout happened on Saturday, March 26, and BTC already traded as high as $48K+.

Since sideways markets can last for as long as they want, patience in this game remains critical. Or, as famous investor Warren Buffett said, “The stock market is a device for transferring money from the impatient to the patient.” The same goes for cryptocurrencies. However, I digress, and now that the breakout is finally underway, it is time to update the EWP.

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

Wave-B (B is for Bounce) Is Now Underway

In early March and before that, I was convinced “the more significant B-wave bounce I anticipated appears still to be on track.” BTC took its sweet time to get going, but now that it is underway, we can start adjusting the upside targets if necessary.

The symmetry breakout target is ~$54.3K. When I then add two layers of wave extensions (red and black waves “c?”, as well as the typical retrace zone for a B-wave aka “bounce” (blue 50-76.4%) I find that the red 161.80% Fibonacci extension, the black 161.80% Fib-extension and the blue 61.80% retrace all cluster around the $55,000+/-500 level.

Thus, four different “fingers” all point to the same level, which is such a strong confluence that I expect BTC to reach that level. Besides, when I analyze the technical indicators (TIs), I find that

• The daily RSI5 is very high (currently at 91): BTC is overbought and vulnerable to a pullback, but the current breakout rally is vital and should continue after the correction.
• The daily MACD points higher. It gave a “buy cross” mid-March and is now in positive territory (above 0).
• The Money Flow Indicator (MFI14) is robust, with a +90 reading: BTC’s price is overbought and vulnerable to a pullback, but it also means that a lot of liquidity flows into the cryptocurrency, and liquidity drives markets. Compare now to early August and mid-October last year and how BTC behaved back then.

Bottom line

BTC has been going sideways for most of the year and finally broke out. I continued to update my premium crypto trading members to remain patient and wait. For those who can’t wait that long, please know my Crypto-Trading-Alert already went long BTC on March 16. Regardless, I remained steadfast in my call for more upside if BTC would hold $34.3K.

The simple symmetry breakout target, two different wave-degree Fibonacci extensions, and typical Fibonacci-retrace levels for a B-wave bounce coincide at around $55,000+/-500. Besides, all the technical indicators are long and strong, suggesting higher prices. However, the TIs are getting overbought, and a short-term pullback to ideally the breakout level of ~$44.3K before the rally continues should not come as a surprise.