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Bitcoin Failed to Reach $27.5+/1K. Is That Bearish?

By:
Dr. Arnout Ter Schure
Updated: Aug 19, 2022, 17:54 UTC

While the wave-iv, v sequence I anticipated almost two weeks ago materialized, it did not reach as high as I initially expected ($27.5K+/-1K). Is that Bearish? Allow me to explain below.

Bitcoin FX Empire

The Rally From The June 18 Low Is Complete

Over the last few weeks, see, for example, here, I shared with you that per the Elliott Wave Principle (EWP), I was

tracking a leading diagonal (LD, green) wave-1/a pattern, which still requires a last (grey) smaller wave-v. For now, it appears wave-iv is still underway and should ideally find support in the $22,000-22,500 region. From there, wave-v should materialize, ideally targeting around $27,5K+/-1000.

The cryptocurrency bottomed on August 4 at $22418 and rallied to $25203 earlier this week. See Figure 1 below. Thus, while the wave-iv, v sequence I anticipated almost two weeks ago materialized, it did not reach as high as I initially expected ($27.5K+/-1K). Is that Bearish? Allow me to explain below.

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

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Five Waves Appear Complete. The Anticipated Pullback Is Underway

In my last update, I found, “Thus, all it requires for the Bulls is to push Bitcoin (BTC) above the late July high of $24676 to complete (grey) wave-v of (green) wave-1/a. The ideal upside target remains $27.5K+/-1000 when BTC breaks above that level as that is now resistance (in May, that was a support zone).

If BTC completes these five waves, the following more significant pullback (green wave-2/b) will be an excellent buying opportunity. In that case, I anticipate, based on the currently available price data, a low of around $22K+/-1K.

  1. Although $27.5+/-1K was not reached, the cryptocurrency did move above the late July high of $24676 this week, and thus -IMHO- completed (grey) wave-v of (green) wave-1/a. Check!
  2. The anticipated wave-2/b pullback is underway. Check!
  3. $22+/-1K has been reached. Check!

But since BTC did not reach as high as $27.5+/-1K and only got to $25.2K, the wave-2/b target zone must be adjusted lower. See Figure 1 above. I now expect wave-2/b to bottom around $20+/-1K. Since the rally lasted two months, the current correction should also take time. Since corrections consist of at least three waves, in this case, grey a-b-c, I expect BTC to bottom soon. That is then (grey) wave-a of (green) wave-2/b. Wave-b should then commence, followed by a final wave-c to complete wave-2/b.

When diagonals are complete, the price quickly drops out of them, moving back to the start of the pattern. In this case, the green target zone at $18.8-20.8K. Besides, the 76.40-61.80% retrace of wave-1/a is between $19.4-20.5K. Thus, there’s a good confluence between the two bolstering the case for a low around that area.

Lastly, I am always wrong till proven right. Thus, if BTC drops below the June 18 low, the two-month rally was a counter-trend rally, and $12K is still possible. As such, the current pullback is a low-risk buying opportunity where one can use the June low as a stop loss level.

About the Author

Dr. Ter Schure founded Intelligent Investing, LLC where he provides detailed daily updates to individuals and private funds on the US markets, Metals & Miners, USD,and Crypto Currencies

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