Hands down, things look bleak for Bitcoin. But regardless of what, such bleakness is likely just a short-term glitch. Any break to the downside should be bought up quickly for a rather steep V-shaped recovery. The deeper it goes (as in the closer it gets to $20 000) the faster and more aggressive that recovery should be.
Based on the current technicals there are a few highly likely outcomes from here on. Some of them we've discussed earlier here on TradingView, others are new.
1) Bitcoin takes a final leg down towards the mid $27 000's for an A wave zigzag. We originally deemed this to be completed amidst the recent $28 600 plunge. Yet, Elliott might have one more minor surprise in store before initiating the B-wave. This would all make good sense for two reasons. Firstly, "everyone" expects Bitcoin to drop significantly upon potentially breaking the $30 000 level as there are no real supports to speak of until $20k. And add to that the number of times Bitcoin has already tested the $30 000 support zone and a strong move is anticipated. In this sense, the "expected thing" would be the unexpected as the market rarely does what the majority expects of it. Such final A-wave zigzag to the $27 500 area (give or take) would nicely align with the primary 0,618 fib.
Upon a steep recovery from this level Bitcoin would initiate its B-wave rally, which, to many, would be a "confirmation" that Bitcoin is now ready for higher highs. That in turn would be the prime area of danger as Bitcoin could then initiate an aggressive C-wave to kill off any last hope.
2) Bitcoin initiates its B-wave already. There are three things that speak loudly in favor of this outcome. Firstly, Bitcoin is flirting with the lower bullish RSI line and would, if closing within 1% from its 39,55 value, issue a strong buy signal. These signals come with a high reliability and low risk and are famous for generating profits in the thousands of percent. As it stands, any daily closing at around $31 500 should result in a buy signal.
Secondly, upon such a buy signal it would likely trigger an initially steep upwards move - one that would also break above the long-stretching RSI resistance. This resistance has eight rejections already. And the more times any resistance line is tested, the more energy it saves up to be released upon a break thereof. A lower bullish red RSI closing in combination with a diagonal RSI resistance breakout should be enough to propel the price into the mid to late $40 000's in the upcoming few weeks.
And thirdly, the lower bullish red line on the weekly stands at 41,65. This number is fixed and never changes. Based on the current reading at 42,02 it does qualify for a weekly buy. Do note, however, that this needs to be the weekly RSI closing - as in +/-1% from 41,65. We always base these on the closes.
But here's an additional very important clue: When a lower bullish red RSI closing comes immediately from high levels - as it does on the weekly Bitcoin chart - any buy signal typically means a relief rally rather than an actual reversal. This would confirm a B-wave move to follow in a textbook fashion. The strong, long-term buy signals are in turn given when the RSI creeps up from lower levels (generally speaking 30 or below) and then makes a clear touch from slightly above.
For more these strategies you are advised to watch the RSI trilogy on our YT channel.
As a short summary: I doubt that Bitcoin will plunge down low from here. A final A-wave zigzag down to the $27 500 area would make perfect sense. If not, and if we get a lower bullish red closing on the daily (and ideally on the weekly too) and a break above the diagonal RSI resistance on the daily, then a steep B-wave should be initiated.
Based on the current technicals there are a few highly likely outcomes from here on. Some of them we've discussed earlier here on TradingView, others are new.
1) Bitcoin takes a final leg down towards the mid $27 000's for an A wave zigzag. We originally deemed this to be completed amidst the recent $28 600 plunge. Yet, Elliott might have one more minor surprise in store before initiating the B-wave. This would all make good sense for two reasons. Firstly, "everyone" expects Bitcoin to drop significantly upon potentially breaking the $30 000 level as there are no real supports to speak of until $20k. And add to that the number of times Bitcoin has already tested the $30 000 support zone and a strong move is anticipated. In this sense, the "expected thing" would be the unexpected as the market rarely does what the majority expects of it. Such final A-wave zigzag to the $27 500 area (give or take) would nicely align with the primary 0,618 fib.
Upon a steep recovery from this level Bitcoin would initiate its B-wave rally, which, to many, would be a "confirmation" that Bitcoin is now ready for higher highs. That in turn would be the prime area of danger as Bitcoin could then initiate an aggressive C-wave to kill off any last hope.
2) Bitcoin initiates its B-wave already. There are three things that speak loudly in favor of this outcome. Firstly, Bitcoin is flirting with the lower bullish RSI line and would, if closing within 1% from its 39,55 value, issue a strong buy signal. These signals come with a high reliability and low risk and are famous for generating profits in the thousands of percent. As it stands, any daily closing at around $31 500 should result in a buy signal.
Secondly, upon such a buy signal it would likely trigger an initially steep upwards move - one that would also break above the long-stretching RSI resistance. This resistance has eight rejections already. And the more times any resistance line is tested, the more energy it saves up to be released upon a break thereof. A lower bullish red RSI closing in combination with a diagonal RSI resistance breakout should be enough to propel the price into the mid to late $40 000's in the upcoming few weeks.
And thirdly, the lower bullish red line on the weekly stands at 41,65. This number is fixed and never changes. Based on the current reading at 42,02 it does qualify for a weekly buy. Do note, however, that this needs to be the weekly RSI closing - as in +/-1% from 41,65. We always base these on the closes.
But here's an additional very important clue: When a lower bullish red RSI closing comes immediately from high levels - as it does on the weekly Bitcoin chart - any buy signal typically means a relief rally rather than an actual reversal. This would confirm a B-wave move to follow in a textbook fashion. The strong, long-term buy signals are in turn given when the RSI creeps up from lower levels (generally speaking 30 or below) and then makes a clear touch from slightly above.
For more these strategies you are advised to watch the RSI trilogy on our YT channel.
As a short summary: I doubt that Bitcoin will plunge down low from here. A final A-wave zigzag down to the $27 500 area would make perfect sense. If not, and if we get a lower bullish red closing on the daily (and ideally on the weekly too) and a break above the diagonal RSI resistance on the daily, then a steep B-wave should be initiated.