BITSTAMP:BTCUSD has continued to plunge since equity markets and crypto markets began sinking this week. The selloff in crypto markets intensified as the inflation outlook worsened on Friday, June 10, with disturbing CPI inflation data published by the Labor Department's Bureau of Labor Statistics.
Using a simple Fibonacci projection, a target for this second wave or leg of the decline is 12,173. The first leg of the correction from the all-time high to the trading low of 25,338.53 on January 24, 2022, may be projected from the bear-rally high of 48,240 on March 28, 2022. When the first leg of the correction is projected from the peak of the bear rally high, a target of 12,173 is the point at which both major waves of the correction have equality / proportionality—a common, but not guaranteed, spot for a correction to end.
However, before assuming 12,173 will be reached, a trader to the short side must first watch for a break of the prior lows on 5/9/22 around 25,300. This coincides with two key Fibonacci levels (both yellow lines), one of which is at 26,425, the .618 retracement of the entire uptrend from the all-time lows. If these levels are broken, then watch the 200-week SMA at 22,287. If none of these levels can hold, a plunge to 12,173 is a much higher probability.
Weekly RSI remains very bearish—see the lower indicator on the chart above. (The RSI line is in purple.) The weekly RSI line was unable to top 52.95 in the recent bear rally ending at the March 28, 2022 peaks. Now, RSI is trending well below its moving average and sloping decisively downward, showing strong downward momentum that is unlikely to reverse substantially until the RSI reaches a very oversold extreme.
The squeeze indicator shows a weekly squeeze has just begun to "fire," which means that the Bollinger Bands are now expanding after compressing for several weeks. This expansion shows an increase in volatility that should last anywhere from 8-10 weekly price bars. Combined with the negative momentum shown on the RSI and the squeeze indicator, the target of 12,173 is likely.
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One commenter below (demoxbt) suggests says that "12,000 lacks common sense, the weekly rsi is at a level its only been at 6 other times in bitcoin history (11 years of PA) on chain analysis also suggests the bottoms in or is close."
1. 12,173 is not guaranteed -- first key supports must be broken around 25,000 and 22,000.
2. Equity indices have hit RSI levels on the weekly chart routinely below 25. The Nasdaq 100 on the weekly RSI hit 20.15 in the 2008 bear market (and other weeks were in the 22-25 range on weekly RSI). The Nasdaq 100 is a much less speculative and volatile asset that BTCUSD, though it does have more volatility than other equity markets. There is no comparison other than equity markets because no multi-year bear market existed since BTC's creation. So it makes sense to compare to 2007-2008 and 1999-2002 equity bear markets.
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Please check out @Tradersweekly's recent BTC analysis, explaining the short-term technical forecast in a neutral and objective way based on key support and resistance levels along with several key traditional indicator readings. This short-term technical view is quite relevant in the near term. @Tradersweekly
Also note that the key support of the 25,000-26,000 range remain very strong and important to watch in the near term. The bulls need to hold this level on any retests. The 22,000 area (200-week MA) may also be tested, retested and broken before any further downward leg towards 12,173 materializes.
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As expected, BTC is finding strong support at the .618 retracement of BTC's entire price move from the ATL (109) to the ATH (69,000). This level lies at 26,425.90—see the blue circle below.
The daily squeeze indicator—a volatility compression + momentum indicator—shows that the daily squeeze has begun to fire (Bollinger Bands widening and pushing outside the Keltner Channels). Combined with the new increase in downward / negative momentum, this suggests that—unless bulls move in quickly—a substantial 2-week decline will occur. Watching closely (not short or long here).
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Initially, BTC has broken below the .618 retracement of BTC's entire rally from 109 (ATL) o 69,000 (ATH). There could likely be a retest (bounce)—possibly several—before this key level is resolved, especially as volatility skyrockets later in the week.
A slice right through the .618 retracement without a struggle, without a retest, would be even more bearish than usual.
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The 25,338.53 low from early May has now been violated as of a couple hours ago. A new low at 24,888 was made. From an EW standpoint, this new low strengthens the bearish case.
Now watching to see if price chops around the 25K-26K area before making its next move lower. 22,200 is the next area to watch over the next week ( 200-week EMA)
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BTC has found intraday support at 22,600, just above its 200-week MA = 22,367. This should be watched carefully for support as retests are likely (as are bounces and gap fills).
Intermediate term, given the technical damage done today, I do not expect the 200-week MA to hold over the next week or so—but this is based purely on technical analysis, not on the fundamental issues happening in crypto-land. I will leave discussion of those fundamental issues to those who are much better qualified to discuss them.
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Wow, just wow. This sort of decline would be a "limit down" day on major US equity indices.
I am shocked at how rapidly BTC price sliced right through the 200-week MA at 22,367. At this point, so extended below its mean to the downside, a violent bounce would be totally reasonable. But further downside first is also within the realm of possibility. This is a spot where people are panicking and liquidating looking at the PA. It's not a great place to enter short or long. It's a place to just sit back and watch, and for me, it's super interesting, because it shows the same sort of painful dynamic that happens in every down-cycle.
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BTC may be trying to bounce as my newest analysis discusses:
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Update: Today, Elliott Wave Forecast (EWF) just provided a downside target for BTC today ranging from 3572–12,079. Especially due to trolls (below) saying a sub-20K price target lacks common sense and other unsupported criticisms, my intermediate-term 12K target may not be as outrageous as it would seem (given the price-history of BTC over the past 2 years and the plethora of bullish "bottom picking" in crypto-verse).
The above 12K target feels less outlandish given that other expert technical analysts see significantly more downside in the coming weeks to months.
Bottom line: If you're trading, be careful and trade with the trend, using stops and discipline. If you're investing (buy and hold), either hedge, or be willing to take a hit if your price is >15K.
Caveat: Elliott Wave counts are not a guarantee (for those unfamiliar with it), but provide a price path with the higher probability than other price paths. Nevertheless, many permutations of the wave counts often exist, so the analysis just focuses on the finding a point of invalidity (stop level) while projecting what appears to be a likely but developing path.
EWF is a technical-analysis firm covering all major asset groups including crypto, and the firm specializes in Elliott Wave.
12k is my target as well, but if you want any followers you have to have a huge random arrow pointing upwards at the end of each chart, lol.
SquishTrade
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@hungry_hippo, Thank you for your comment! And I appreciate the advice about arrows—I'm newer to the platform, and I'm still laughing from what you wrote about the arrows. It's funny how a sort of "happy" ending to the bearish story makes all the difference for many. But it makes good sense! Cheers.
cure4virus
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@hungry_hippo, Well, I project BTC falls to 12,039 $ . It is based on historical analysis of BTC. Now I am embarrassed for my BIG Arrow (.lol) . Hope I can still follow you?
SquishTrade
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@cure4virus, Don't be embarrassed! You did it correctly from a publishing standpoint. I'm the one who failed to draw the big arrow :) lol
hungry_hippo
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@cure4virus, you can follow me if you want, but I'm not following you unless your chart has a huge arrow pointing upwards at the end.
Everyone likes a happy ending, lol.
cure4virus
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@hungry_hippo, According to laws of the Universe there are always Highs and Lows, high tides and low tides, time to gather stones and time to disperse them (from the book of Ecclesiastes btw). I am happy when my big arrow is Up. And happy when my arrow is down -as long as there is a profit at the bottom, I know it will rise again
hungry_hippo
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@cure4virus, I do short term trading based on what US futures are doing. I don't care if things go up or down, as long as I guess correctly, which I apparently did Friday. I will trade calls and puts, but I don't trade crypto at all.
I'm obviously joking about the big arrow, people here like to troll. Trolling doesn't change market direction, it's just idiots venting because they're losing money.
BloodRawIsraelite
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ignore the haters they dont know cycles the patience will be rich
SquishTrade
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@BloodRawIsraelite, Thank you for commenting. Patience and cycles are important.
MyDyingBride67
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Absolutely possible, of course stops along way but an 80%-ish correction from ATH is certainly within the BTC realm. I'm thinking at least a wick in that area by Sep/Oct of this year but I don't put a lot faith in my time line, more so in price. Anyway thanks for the chart and opinion.