Bitcoin price pulled lower, today, in what appears to be a larger correction prior to a final wave of advance. While prediction is dangerous, especially about the future (Niels Bohr), there is some evidence in the cart that one more advancing wave is due.
Bitcoin Price Analysis
Time of analysis: 14h54 UTC
Bitstamp 15-Minute Chart
From the analysis pages of xbt.social, earlier today:
Price made a deep correction today and a wave count interpretation of the price action is annotated above.
An Elliott wave count has the present low as a completed (or near complete) wave IV. We cannot yet be certain that the market will not make one more declining wave to the red label v, so caution is advised until price has confirmed the end of the wave IV correction by advancing above the 20MA in the 1-hour chart (the above chart is 15-minute candle timeframe).
The interpretation that wave IV may already be complete is based on the MACD extremes circled in grey (bottom panel). Wave iii is typically confirmed by a MACD extreme for each price wave. Wave v is typically accompanied by indicator divergence just prior to a correction (or reversal).
Both of the conditions described above (MACD extreme and indicator divergence) are present at the current wave low. Additionally, wave IV has retraced to the level of a previous lower degree wave iv – also a sign that price is completing a larger degree correction that will soon see advance (in five waves) for wave V. Due to limited chart space the wave V label is not annotated at its expected target near $254 (level of the 1-day 200MA in the Bitstamp chart).
The only caveat, as mentioned above, is that the wave count for wave C of IV may be incorrect, and that the market may get pulled into one last wave of decline – as indicated by the red wave count labels. This outcome will also register a final divergence in the indicators that should convince the market that the downward correction has been exhausted.
Prediction is dangerous, especially about the future. – Niels Bohr
Bitcoin price chart analysis implies another wave of advance. Once wave V to the upside has completed, we watch for a strong downward correction to below the 20MA in the 1-hour and 4-hour timeframes. This will serve as confirmation of reversal into the final wave of the larger decline that has lasted almost two years.
The above scenario would be mitigated by continuing advance to $300 although the probability of this outcome is low in the currently derailing global economy. The main driver of continuing advance would be a flight to bitcoin as safe haven, but the effect of deflation on market behavior is for panicked investors to flee to cash rather than make rational decisions to buy commodities. Note that gold has declined to $1010 during the past 24 hours.
Bitfinex orderbook depth and Buy/Sell Volume:
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