Have you heard about Elliott Waves?
It's a way to understand movements of prices and anticipate shifts in trends.
A “Wave 5” for the ages?
According to the Elliott Wave Theory, markets move in five waves.
The first wave is small but noticeable, followed by a drop in the second wave. The third wave is the longest and strongest, followed by a pull-back fourth wave and ending with a fifth wave that pushes the price higher but does not give a return as large as wave three.
Investopedia has an example:
We can see this pattern playing out on the monthly chart from 2022 to today.
Let’s not get ahead of ourselves
Don’t stress!
We don’t know how high wave 5 will go.
This is a very long-term chart so it could take 2–3 more months to figure this out. For all we know, December’s high could have completed wave 5.
Once we see a pullback of any great size, we can talk about a “second chance” relief rally or complacency bounce before a larger, cyclical correction (like a bear market). At that point, we will reach the A-B-C portion of the image from Investopedia.
For now, we’ll just have to see how it goes.
Did you like this analysis? It’s a snippet from my the January 14, 2025, market update of my newsletter, Crypto is Easy.
You can watch a video of that snippet on YouTube.
Mark Helfman publishes the Crypto is Easy newsletter. He is also the author of three books and a top Bitcoin writer on Medium and Hacker Noon. Learn more about him in his bio and connect with him on Tealfeed.