Bitcoin Correction - The Elliott Wave theory for why it is over
I’ve been wondering why there are so many chartists willing to bet that BTC is about to correct back down to $30k or lower, but now understand that this belief is routed in a misinterpretation of the Elliott Wave structure of the recent Bitcoin correction. Let me explain...
An incorrect ABC wave count of the Bitcoin correction might look like the following chart, where A was the June low and B the recent high, projecting wave C to fall below B.
However, this is a misunderstanding of the structure of the correction down to the bottom of the June low. A correct interpretation would instead view the origin of wave A starting on March 13, as below.
This is an Irregular Expanded Flat corrective structure in Elliott Wave theory. It has the form of a 3-3-5 sub-wave pattern, and is identified as irregular because the peak of the B-wave rises above the origin of the A-wave.
The total structure, including sub-wave counts and with a Fibonacci projection of Wave A from B forecasting the bottom, is shown in the chart at the top.
For the doubters, there are three proofs to this proposition:
Therefore, the only structure that fits the price action is an Irregular Expanded Flat Elliott Wave correction, which completed on June 22, 2021.
If you disagree, please feel free to explain yourself in the comments.
An incorrect ABC wave count of the Bitcoin correction might look like the following chart, where A was the June low and B the recent high, projecting wave C to fall below B.
However, this is a misunderstanding of the structure of the correction down to the bottom of the June low. A correct interpretation would instead view the origin of wave A starting on March 13, as below.
This is an Irregular Expanded Flat corrective structure in Elliott Wave theory. It has the form of a 3-3-5 sub-wave pattern, and is identified as irregular because the peak of the B-wave rises above the origin of the A-wave.
The total structure, including sub-wave counts and with a Fibonacci projection of Wave A from B forecasting the bottom, is shown in the chart at the top.
For the doubters, there are three proofs to this proposition:
- The wave pattern from A to B is an ABC wave pattern in three phases. If not part of a corrective movement as proposed, this would otherwise be required to be an impulsive structure of 5 waves.
- The movement down from B to C is a 5 wave impulse, necessary to complete the Elliott Wave Flat correction.
- If the movement to the June 22 low from the $65K high was Wave A of a correction, it would be in a 3 wave movement rather than the 5 wave movement observed.
Therefore, the only structure that fits the price action is an Irregular Expanded Flat Elliott Wave correction, which completed on June 22, 2021.
If you disagree, please feel free to explain yourself in the comments.
Comment:
What I thought was a sharp correction to Wave 2 has turned into more well structure ABC correction to a lower-low. If support at $39k fails, this corrective structure threatens to become a downward impulse waveform, which might bode poorly for BTC and alt markets for the remainder of the year. But I still doubt that will materialise.
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