Deep Dive into Bitcoin’s Elliott Wave Count

Extended Fifth Wave?

Two weeks ago, see here, we found for Bitcoin (BTC) using the Elliott Wave Principle (EWP), ” Resistance is now at $25.5K, whereas the … more typical relationship between the 5th wave and the 1st and 3rd wave, … is often 0.618x the entire W-i+iii rally. Thus, as long as BTC can hold above $22.5K, we can allow for higher prices and our $27-28K target zone to be reached.”

A day later, BTC topped at $25.3K, right at Resistance, and dropped to $22.8K this past weekend. So is the ideal target, and remember, markets do not have to be ideal, of $27-28K still attainable? Cryptos are famous for extended 5th waves, and Bitcoin is no exception. In this option, see Figure 1 below, the decline into the weekend was a 62% retrace of the February rally.

Hence, we can have a nice green W-1, 2 set up. As long as the lows made this weekend hold, we can allow for this setup (thus, these lows can be used as a stop loss). It will require a breakout above the February highs ($25,333) without breaking lower to confirm this option. We can then look forward to a rally to ideally $31K+/-500.

If BTC drops below this weekend’s low, it is a severe warning to the Bulls, triggering a possible drop to the red W-iv low. Below that and the option shown in Figure 2 below becomes more likely.

Below the February Low, Can Target $18-20K

In that case, we will likely see a red W-b bounce first to ideally $24,500+/-500. This “dead cat bounce” is most likely now underway. After, the red W-c kicks in to ideally $20-20.5K. A daily close above Monday’s high triggers this path, but also the initial phase of the Bullish resolution shown in Figure 1.

Hence, why anyone going long at this stage must implement proper trading techniques (proper stop-loss levels, raising stops, partial profit taking, etc.) because things are still less confident/less clear at this stage.

A rally into that zone and a drop below the weekend low at $22.8K (red W-a) triggers red W-c. Note the red target zone in Figure 2 is based on the standard W-c = W-a to W-c = 1.618x W-a, but W-c can always extend (2.618x a, for example). A drop to the $17780 level (76.40% retrace of black W-1/a) should not be unexpected. From that zone ($19+/-1K, ideally), we should expect a W-3/c to $30-35K.

Bottomline

Bitcoin fell a bit short of our ideal target zone of $27-28K by topping, so far, at $25.3K. Hence, although one can make many correct forecasts using the EWP, nobody can foresee everything exactly all the time. That is why all we can do is “anticipate, monitor, and adjust if necessary.” We anticipated $27-28K for weeks, knowing Resistance was at around $25.5K. We monitored and found BTC did not break above Resistance, and as such, we adjusted our primary expectations.

If the Bulls can hold the price of BTC above the February low at $21.4K, with a first warning below the past weekend’s low at $22.8K, and rally it above the February high at $25.3K, with a first warning for the Bears above $24.8K, then $30K can be attained. Any break below these critical lows triggers a setup to as low as $19+/-1K.