BTCUSD Elliott Wave Analysis - Counts and Forecasts

BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar
Before Wave V can commence, Wave IV must exert it's toll, the dreaded correction. How this correction will play out can take several forms. Since we are early into the TIME aspect of this correction, it is impossible to state how it will develop. As a reminder, the correction after Wave I, took the form of a Zig-Zag , and spanned approximately 1 year, Jan - Dec 2015.

While not "Rules", Elliott Wave Analysis does set out "Guidelines" in additional to "Rules". In regard to Corrections, I have copied these guidelines and am including them here for your information (education) and convenience. The source is at:
- If wave 2 was a sharp correction, wave 4 will almost always be a sideways correction and vice versa (Alternation).
- Wave 2 is usually a zigzag or zigzag combination.
- Wave 4 is usually a flat, triangle or combination thereof.
- Wave 4 usually ends within the price territory of the fourth wave of wave 3.
-- (in this case, this may be ignored as wave 4 of 3 of W-III is below the crest of W-I, and W-IV may not, by rule, impose into W-I territory.)

So, recapping, Wave I climaxed in December 2014 at US$1163. The Wave II correction was steep in price terms making a Zig-Zag pattern, and ended in Jan 2015 at the low price of $152.50 retracing in excess of 78.6% of the advance from low single digits. A little over 2.5 years later, W-III crested just short of $3000. The current correction low has only retraced a small 25%-ish of the advance thus far. The corrective retracement could extend to 61.8% of the advance from the W-II lows without impinging into W-I territory. But by guideline, since W-II was sharp , W-IV should be shallow as the alternation guideline suggests.

Below, I will present 3 scenarios that I believe this correction is more likely to follow. The deeper corrections could only retrace 38.2% rather than the 50% as presented. The Time frame for Wave IV to play out may well extend considerably beyond the 3 month time frame captured within the charts. If we only correct for 3 months after a 2.5 year bull run, it would indeed be not only shallow, but short.

Good luck trading, or be patient if you are a HODler, this too shall pass in the longer run.

Wave III Correction: Barrier Triangle (Medium to High Probability)

Wave III Correction: Flat (Medium to High Probability)

Wave III Correction: Falling Wedge (Low Probability)
Comment: All 3 scenarios listed above are still in play.

Short Term (days to weeks, maybe a month): Bullish break out of the triangle. Targeting (C) and B, the timing and level are unknown.

Mid Term (weeks to months): Bearish after this short Bullish Run. The correction is not over. 1 & 1/2 years of bullish Wave III are not fully corrected by a short shallow correction to A that lasted a few days. Corrective sub-wave B will extract it's toll from the bulls who imagine straight line markets to the moon, and forget the last 1 & 1/2 years included serious corrections. Further, and fundamentally, nothing has been resolved regarding BTC's future. Will it be a UASF under BIP148? That sets an August climax for this run. Will it be a UAHF the large miners including BitMain are advocating for? That could happen before August. Climaxing the short term bull run, as confusion sets in about the future of a larger block size BCU (Bit Coin Unlimited) and BCC (BitCoin Classic) with the originally designed 1MB block size. Will it be another modification like SegWit2X? Too many uncertainties.

Long Term (months to a year): Bullish as Wave V plays out.


there is no D & E in Elliot Wave theory.
@mfgex, Elliott Wave International, an authority on Elliott Wave Theory presents examples that disagree with your supposition.
Why do you expect a pump before all these dumps?
RogueDave CoinMajesty
@jsburgos, LOL, I'm not expecting pumps or dumps. The natural order of the market is there are buyers and sellers. When there are more buyers than sellers, the price rises. When there are more sellers than buyers, the price falls.

BitCoin experienced a massive price rise this year, more than doubling between January and June. It has fallen back, at most, from $2980 to $2120, and has since recovered to around $2450 currently. It went too far too fast, and now it is correcting.

Moreover, there are issues regarding BitCoin that are well known, or they should be, if you are holding, trading, thinking of buying, or thinking of selling. In the next month, decisions about a variety of proposals that have been made to "improve" BTC will be made. These software coding changes are intended to address the 1MB block size constraint that must increase for the efficiency of the network transaction handling. There are completing Proposals on how to do this: BIP141, SegWit, SegWit2x, and a UAHF. The BTC ecosystem are not unified in which proposals best serve the entire community. Hope for a consensus agreement has 1 month before a deadline on August 1 will take effect that much of the ecosystem are signalling their agreement or acceptance to go forward with, but some important groups may hold back and not participate.

Hope will bring in buyers, uncertainty will bring out sellers.
+1 Reply
Very theoretical explanation, very didactic, perfect.
RogueDave mozartc
@mozartc, Just building upon the basics of Elliott Wave Theory for my analysis. ;) Peace.
A very good 3rd theory. Following all these rules we would then go for the value of 1536 dollars
RogueDave mozartc
@mozartc, I assigned a low probability to the Falling Wedge Scenario, because it requires a deeper retracement, while a Wave IV retracement is typically a shallower correction, per the Alteration guideline, with respect to depth.

The Barrier Triangle Scenario requires the least shallow retracement, which has already been completed at 23.6%.
The Flat Correction Scenario could end near only a 38.2% retracement, with the terminal point C only modestly below point A.

So, thanks for your comment, I appreciate your feedback, though I think the other 2 scenarios are more likely.
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