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Dr. Arnout Ter Schure
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Early last week, I showed, using the Elliott Waves (EWP), “I prefer the larger ending diagonal (ED). EDs are hard to forecast price structures as they consist of five waves, which [in turn] most often are comprised of three overlapping waves to the upside and downside. BTC is most likely in wave-iii, subdividing into three (a, b, c) waves … [with] wave-c to ideally $66050-72175. … A daily close back above last week’s high ($60062) will favor the upside diagonal. A daily close below $53900 is needed to shift the odds in favor of the Bearish option (a diagonal to the downside).

The above “if-then” scenario is the power and beauty of the EWP as it allows for straightforward elimination of options and increases one’s trading success’ odds. BTC has rallied over the last nine days since my last update. With the additional available price data, I know the ED pattern to the upside is operable: blue lines in Figure 1 below, as so far BTC has done nothing to invalidate it. Please compare to the ED example inserted in Figure 1.

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

The Contracting Diagonal pattern suggests a choppy rally to around $72K.

As said before, EDs are choppy, terminal patterns, and the recent price action supports this notion as BTC is barely above its March 13 wave-i top of $61749. Because in contracting diagonals the 3rd wave cannot be longer than the 1st wave I find BTC should ideally top at a maximum of $69K. This level corresponds with the (red) wave-iii=i relationship, the (green) 1.382x extension for minor-c of wave-iii, and the (grey) c=a extension of grey minute-c of minor wave-c, exemplifying the fractal and complex nature of the internal waves of a contracting ending diagonal. Once wave-iii completes, wave-iv should drop to around the lower blue trend line, which should be around $62K. (Red) wave-v of (black) wave-5 of an even larger (blue) wave-III will target about $72K. From there, BTC should then fall back to the beginning of the ED pattern to complete wave-IV: the low $50Ks to the low $40Ks. Only then is BTC, IMHO, ready to set up for a rally into the six digits: blue wave-V.

What does it take to invalidate my preferred POV? A first warning will be on a daily close below $59K, with a “lights out” on a daily close below $55355. Why? Because if BTC drops that low from current levels, the ED pattern as shown will not complete. Please remember that BTC is, IMHO, in a larger-degree terminal pattern, and the price action over the next few weeks will not be as easy to trade, track and forecast as it was before. Thus, one has to “anticipate, monitor, and adjust” to allow for safe trading now more than ever.

For a look at all of today’s economic events, check out our economic calendar.

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