Bitcoin: What Comes After Wave 5?

Bitcoin has pushed into the 50K area while showing continual signs of hesitation. Is this the top? While there are no particular reversals or sell setups, the price level is a place for concern. One of our recent swing trades took about two and a half weeks to reach all 3 profit targets upon pushing through our third one at 48,650.

So Now What?

The Elliott Wave counts have been instrumental in providing perspective and confidence as far as managing our short term positions (swing trades). The entry at 33,650 was based on anticipating a Wave 5 of a broader 3 and Bitcoin agreed with that forecast. Now the concern is, when does this Wave 5 complete? What comes after a Wave 5 of an impulse? A corrective wave and in this situation that would be a broad Wave 4. (See August peak for Gold).

Keeping the wave count in mind helps to keep a tight gauge on risk. While it is possible for price to continue higher from here (next projection is 50K, then mid 50K Area), it is also equally possible to see a broad corrective wave begin. The price action will provide the clues so it really just becomes a matter of waiting for the right criteria to line up before entering into a new swing trade long. The long may be a trend continuation pattern OR it may be near the low of a broader retrace.

The key trend support is now 32,500. As long as price stays above this area, it is still within the broader bullish trend, even if a bearish formation develops. IF this level is taken out, then price is likely going into the broad Wave 4 which can persist for weeks or months.

While price stays above the 45K minor support, it is establishing a higher low formation and can lead to a higher high. This potential leg higher may be the minor 5 of 5 of 3. Where it peaks is anyone's GUESS. The key take away here is to practice cautious optimism and not get caught up in any over exaggerated hype or other emotional stimulus. Often when markets look their best, it is the worst time to assume risk. Most importantly, if you do buy into it on the next break out, and it fails, be prepared to take a small loss rather than getting caught in HOPE mode. Those who get caught at these highs are most likely to be at the mercy of the market, which often results in emotional decision making at the least opportune times.

Thank you for considering my analysis and perspective, I hope you found it helpful.

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