Dissecting Bitcoin’s Counter Trend Rally

Almost two weeks ago, see here, I found using the Elliott Wave Principle (EWP) method, “the weekly chart setup has all the ingredients in place to allow for a multi-week counter-trend rally to ideally $60+/-2.5K before the subsequent C-wave decline starts.”

So how exactly will this multi-week counter-trend rally unfold? Though one cannot forecast all the daily price swings, one can get a reasonable expectation on how Bitcoin‘s price (BTC) should move over the next few days. Figure 1 below shows the two main paths/options BTC has.

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

I can identify three more significant waves from the November all-time high (ATH) to the January low: black major a, b, and c. These three waves are subdivided into five, three, five smaller waves, respectively. A perfect zigzag. Thus, this down leg of the correction was completed, and we now must anticipate at least a three-legged rally back up. Since my preferred view is that the November ATH was a Cycle-3 wave, BTC should now be in Cycle-4.

Fourth waves are often flat or triangular corrections: 3-3-5 or 3-3-3 patterns. With already three waves down confirmed into the January low, we thus have the first leg completed: blue primary wave-A (see Figure 1).

Wave-B (B is for Bounce) will comprise three more minor waves.

Having established wave-A is complete and that we must anticipate at least three legs, i.e., waves, higher for wave-B. I can figure out the path/road map of these three legs: black, major waves a, b, c, as shown in Figure 1. Near-term, the question is if black wave-a will comprise five smaller (red, intermediate) waves or only three. My preference is for five, given today’s rally.

In that case, wave-v of wave-a should ideally target resistance and the blue 38.20% retrace level at around $46700+/-200. Then (black) wave-b should ideally bring BTC back to support at $40,000+/-1,000 before a strong wave-c takes hold and rallies price to ideally $62,000+/-2000 to complete (blue) Primary wave-B. The above roadmap is exemplified in Figure 1 using the solid red arrows.

If BTC drops below yesterday’s low from around current levels, then there were only three (red) waves up from the January low, and black wave-b can then easily fall back to $35,000+/-1000 once again. From there, an extended c-wave can target as high as $65,000+/-1000. This road map is exemplified in Figure 1 with the black dotted arrows.

Thus, two paths lead to the same outcome, and near term, I am monitoring the price action for my premium crypto trading members to see if the five smaller red waves materialize or not. Given the bullishness of the technical indicators (green dotted arrows), I prefer the five-smaller waves scenario (solid red arrows).

Bottom line: As more price data is becoming available for BTC, the multi-week counter-trend rally to ideally $60+/-2.5K, which I anticipated already over a month ago (see here), can now be dissected in more detail. If BTC can hold $40K from current levels, I expect the cryptocurrency to top at around $46.7K, followed by a drop back to that critical $40K.

From there, a robust multi-week rally to $60K+ should materialize to complete the “B is for Bounce” counter-trend rally. After that, the subsequent C-wave down to $30-35K should happen to achieve a significant, multi-month Cycle 4 wave this summer. And as we know from the EWP, after four comes five, and BTC should then be ready to reach six-figures. But for now, let’s focus on the five smaller waves up or not.