Bitcoin - Clarity begins to emerge

BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar
Since the drop from the wave 3 high into the low of 6/22, the big question has been whether or not all of wave 4 had completed, or if we needed to see another drop to lower lows to complete wave 4. With the recent break of key support of 605.50, we got the answer to that question as price continued to lower lows.

I posted a short term bearish chart to the bitcoin room a few days ago to indicate what the pattern structure suggested as likely support levels if that upper key support was broken: https://www.tradingview.com/chat/m/ac4e9...

As we saw on 8/2, the wave C of 4 drop stopped at 465.28 - just inside the lower blue support box on the chart above. This is significant because it is the point (within one dollar) where wave C equals wave A - the ideal support for a wave C corrective wave. So we now have a perfect-looking wave 4 bottom to potentially resume the long term uptrend.

However, there's a problem. The drop for wave C of 4 counts best as a 3 wave move on the daily chart , when it should more ideally be 5 waves. It's possible that a trend reversal can occur from this type of incomplete bottomming structure, but it doesn't provide full confidence. There are also other issues with starting a new uptrend from the current level, such as declining MACD .

So. in order to trust that we have now completed all of wave 4, and that the long term uptrend has resumed, we need to see the . 618 retracement from the 8/2 low taken out in a 5 wave impulsive structure - around the 600 level.

If we fail before or around 600 (where the blue wave iv is marked on the chart) in a 3 wave move, the pattern would point to a drop to the lower support area around 320.

So, now we wait and see...the pattern structure since the 6/22 low is consistent with wave 4 behavior - at multiple time scales - and the long term expectation remains bullish . We'll just need final confirmation to have confidence that wave 4 is, in fact, complete...or if a drop to lower lows is required first.
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