According to our EW count the end of Bitcoin's correction could be near.
Where are we now?
Our last short has worked out perfectly and on Friday we have completed 5 waves down.
We can interpret this 5-waves move as a larger wave (i). In this scenario we still have 2 more large motive waves down, likely sub-30k. This is the bearish scenario, marked in red: (i) to (v). It will complete the entire correction from the ATH, and after this, we can expect a lot of mooning towards new highs - maybe even for the rest of 2021. This is my assumption and it aligns with the previous analyses of BTC and ETH. It would also be an epic buying opportunity.
In the bullish count, this 5-waves move is an A, and we are currently in wave B, followed by a C with another 5 sub-waves down (green illustration). In this scenario we will not see any lower lows, but a lot of ranging and ultimately a very strong move to the upside which could (potentially) mark the end of the correction - but it would be a more complex scenario overall.
How to trade it?
Because the previous 5 waves down were clearly impulsive, the bearish scenario has a high probability. We can look for a retracement into the fib levels (red boxes) and attempt a short that will catch the large wave (iii) downwards. In the bullish scenario we are currently in a wave B and buy the dip, once we identify the wave C that consists of 5 sub-waves with a slow, sideways character. If price comes crashing down, we know it is the wave (iii) of the bearish scenario, and obviously we will not long that.
Thoughts on Correlations
Crypto is somewhat correlated with the Nasdaq and inversely correlated with DXY. Both are currently not very helpful for crypto bulls. For the bullish scenario we would need the Dollar to pause its uptrend and the Nasdaq to go higher - or at least keep ranging. Read my other analysis why I believe the Nasdaq could make a leg down, before another (final) bullrun in late summer or autumn that could be followed by a gigantic bear market.
Happy trading!
Trade active
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Intraday update: Re-count of wave 1. We are in sub-wave 5 now.
Smaller count of the previous 5 waves down, including fib ratios:
Amro_Elzeiny
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In the last bearish move, how can be wave 3 shorter than wave 5? is it possible? I think it's not similar to basics we learned of how Elliot waves work
UnknownUnicorn12250317
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@Amro_Elzeiny, Hi, I have posted the smaller count above. Yes, we would have to see wave 5 as extended, I think it can make sense then. Wave 3 can be shorter than wave 5, but it cannot be the shortest in the entire move. If you want to measure it by yourself, you can apply log scale. I only use log scale.
Amro_Elzeiny
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@kgh001, I have 2 questions if you allow me to
1- Can we have cases in Elliot waves that wave 5 is longer than 3?
2- Is there any bullish scenario from the current demand zone to visit 42k?