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Dr. Arnout Ter Schure
Golden bitcoin coin on keyboard

Why is BTC not continuing its unabated rally? I even have had traders sign up for my Premium Crypto Trading Service, literally thinking BTC would only and always go up. Well, no. BTC, like any other financial asset, still must go through its Elliott Waves (EWP).

Two weeks ago, based on the available data, I concluded, “If BTC moves below $52625 without making a new ATH first, my preferred “flat wave-4” scenario continues to play out as initially anticipated, with the added “flavor” of an irregular flat. Therefore, the ideal downside target can be adjusted to $43K+/-1K for a classic C=A relationship. Once the downside region is reached, I then expect the rally to $75K+ to take hold. If there is no overlap with $52625 over the next several days, and BTC can instead reclaim its 10d and 20d SMAs, to be followed by a rally over $60K, then the impulse pattern with an ideal top at $63.4K is favored. Only then can the Bears have another shot at, with a potential downside target of $40+/-1K.

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

More downside was correct but limited. Can BTC, therefore, still reach $70K?!

Fast forward, and as I preferred, BTC moved lower. It dropped below $52625, bottomed at $50406 on March 25, but never reached $43K +/- 1K. Instead, it rallied back to $60K. Thus, my idea BTC would see the low $40Ks when below $52625 was wrong. But, as said at the beginning of my update, BTC has not moved much over the last two months (on February 21, it reached $58K, and today April 6 it is still at $58K). Unfortunately, sideways price action is the hardest to interpret, especially from an EWP perspective, as it leaves the door open to many options. But eventually, one option will be chosen by the market, the smoke will clear, and the subsequent path will then be much easier to forecast, track and trade. As usual, all we can do is “anticipate, monitor, and adjust.”

So, what is next? With the current and additional price data at hand, I now prefer the larger ending diagonal (ED), as shown in blue Figure 1A. EDs are hard to forecast price structures as they consist of five waves, which most often are comprised of three overlapping, waves to the upside and downside: the green a, b, c’s of the larger (red) waves i, ii, iii, (and iv and v). As you can see, the red wave-i rally of the black (major) 4 low made at the end of February was three waves (green a, b, c), with the c-wave made up of five smaller waves (grey waves i, ii, iii, iv and v). The subsequent decline, red wave-ii, was also three waves. BTC is most likely in red wave-iii, which is also subdividing in three green (a, b, c) waves. Wave-a completed, wave-b is likely still underway and soon to be followed by green wave-c to ideally $66050-72175 depending on the exact Fibonacci-extension it will have. From there, a wave-iv and v await but let’s focus for now on the potential wave-iii as the internal price structure is complicated enough. Right!? Well, such is the nature of EDs: hard to forecast, track and trade as there are few firm rules (see here for a summary)

The Bearish option is the diagonal to the downside to complete black major 4. See Figure 1B. The market has still left this major-4 option on the table but is close to invalidating it. A daily close back above last week’s high ($60062) will favor the upside diagonal. A daily close below $53900 is now needed to shift odds in favor of this Bearish option.

Thus, while BTC has not done much over the last two months, it will soon tip its hand and tell us which of the options it will prefer: breakout is Bullish and targets the low $70Ks ultimately, while a breakdown is Bearish and targets the low $40s once again before reaching the $70Ks.

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