Many questions are raised around the current bitcoin market, while uncertainty takes hold and countless possibilities are thrown through analysis everywhere, there is no doubt how the market will actually behave in the short term.
It is a consensus in almost all analyzes that bitcoin in the long run will go up a lot. But now the situation is uncertain, this is because, by Elliot's wave count, we are in a corrective wave 4 combo (or beginning of wave 5 as I will elaborate later) and this wave 4 tends to be the most complicated to determine the movement, because when it seems to be taking a definite shape, completely changes the setting that was previously viewed.
My idea with this article is to address different market views by elucidating the possibilities.
It is possible to find a triangle on the daily bitcoin chart, this along with the volume drop over time show us that the bitcoin corrective period is coming to an end, but the big question that confuses many people is whether the price falls again below $ 9,000 or from that last pump it goes up in a new boost that will take the price to new heights.
Doing a fibonacci time analysis to detect three time possibilities for the end of this 4-wave correction. The first tells us that the correction ends on September 1 (so my last post tells about a possibility back from the main trend ) the second gives us for the second week of September and the third gives us for the last days of September.
Taking a brief look at market sentiment, we can see that bitcoin's fear and greed index is marking the same period last year where the market was in a bear market, so the fear that the price will fall beyond what is Now it's too big. From this I will elaborate the short term bearish theory.
Entering BITSTAMP's monthly chart, you can see the price change since 2012 and form Elliot's wave theory from a macro view. From this we can identify that in the current bull run we are going through a corrective wave 2, it is also possible to identify by fibonacci a pattern that occurred in the last markets, the corrective wave 2 always goes back 0.5 of wave 1 and this value coincides with the price of 8,500 . Given that this pattern could only be seen twice, it cannot be guaranteed that it will occur again.
As mentioned earlier, wave 4 is the most difficult to measure given its complexity. Thus, a possibility that would confirm this downtrend would be the one elaborated in the image above. The set of the first five waves (ABCDE) would be A wave in a larger proportion, the second ABC would be the pre-fall momentum and what we are looking at now may be the final wave of this correction which brings us back to the $ 8,500 level.
In counterpoint to this theory, it can be observed that, to lower degrees, wave four may not reach the 0.5 fibonacci (different from what occurred on the monthly chart), it is only necessary to enter the zone between 0.38 and 0.5.
For the price to actually rise again on an uptrend, it is necessary that in the coming days the price will break this resistance line again and the price in smaller graphical times will remain above, thus making it a support.
It is interesting to note the behavior of the RSI during the corrective period, the signal line has just crossed the EMA indicating beginning of buying strength, this coupled with the fact that the RSI has recently approached the 40 zone may give us insight that it will there may be an attempt to break the resistance mentioned above.
Finally, you need to be aware that breaking the current triangle can give a false buy signal, as in the example in the past of the chart, note that the triangle was broken and closed above the break, but in the following days the opposite happened. than expected and there was a sharp drop in price. Be aware of the chart and it is recommended that at any sign of reversal it is better to leave your position with 1% loss than to lose your equity entirely.
Thank you for reading :D