• Bitcoin (BTC/USD) continued to drop after the break below the 38.2% Fibonacci level. But price action managed to reach the 61.8% Fib rather than just the 50% Fib. 

  • Wave 2 (pink) was very shallow so a deeper retrace now makes sense. Because waves 2 and 4 are usually the opposite in their character (shallow vs deep).

  • The current pullback respected the 61.8% Fibonacci support. This could indicate a bullish ABC (blue) pattern towards the previous bottoms (red box).

This deep decline is unusual for a wave 4 but not illogical in this case. Let’s review the Elliott Wave patterns in more detail.

Chart

Price charts and technical analysis

The BTC/USD made a deep retracement in wave 4 (pink). Usually waves 4 retrace only to the 38.2% Fib. 

  1. But in this case, wave 2 (pink) was very shallow so a deeper retrace now makes sense. Because waves 2 and 4 are usually the opposite in their character (shallow vs deep).

  2. Wave 2 was not only shallow but also simple. This means that wave 4 (pink) could also become complex besides being deep.

  3. BTCUSD respected and bounced at the 61.8% Fibonacci level. This could indicate the end of the wave A (grey). 

  4. A bullish bounce (green arrow) could create a retest of the top in wave B (grey).

  5. Then another bearish price swing could complete wave C (grey) in wave 4 (pink).

  6. Once the ABC (grey) is completed, the wave 4 (pink) could be completed and another uptrend (blue arrows) could start wave 5 (pink).

  7. If Bitcoin, however, fails to break above the 21 ema zone on the weekly chart, then the uptrend is probably over (grey arrows). 

  8. In that case, price action could drop further down after a sideways range.

On the 4 hour chart, Bitcoin (BTC/USD) seems to have completed an ABC (blue) in wave B (orange) followed by 5 bearish waves (blue) in wave C (orange):

  1. The current pullback respected the 61.8% Fibonacci support.

  2. This could indicate a bullish ABC (blue) pattern towards the previous bottoms (red box).

  3. The main targets are the -27.2% and -61.8% plus long-term moving averages.

  4. A bearish bounce at the target zone could complete wave A (orange) and start wave B (orange).

  5. A strong bullish bounce (green arrows) could indicate a wave C up (orange).

  6. A break below the bottom invalidates the current wave outlook (red circle).

Chart


The analysis has been done with the ecs.SWAT method and ebook.

Elite CurrenSea Training Program(s) should not be treated as a recommendation or a suggestion to buy or sell any security or the suitability of any investment strategy for Student. The purchase, sale, or advice regarding any security, other financial instrument or system can only be performed by a licensed Industry representative; such as, but not limited to a Broker/Dealer, Introducing Broker, FCM and/or Registered Investment Advisor. Neither Elite CurrenSea nor its representatives are licensed to make such advisements. Electronic active trading (trading) may put your capital at risk, hence all trading decisions are made at your own risk. Furthermore, trading may also involve a high volume & frequency of trading activity. Each trade generates a commission and the total daily commission on such a high volume of trading can be considerable. Trading accounts should be considered speculative in nature with the objective being to generate short-term profits. This activity may result in the loss of more than 100% of an investment, which is the sole responsibility of the client. Any trader should realise the operation of a margin account under various market conditions and review his or her investment objectives, financial resources and risk tolerances to determine whether margin trading is appropriate for them. The increased leverage which margin provides may heighten risk substantially, including the risk of loss in excess of 100% of an investment.

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