Bitcoin is consolidating in a correction mode before rising towards 100k.
The recent decline appears to be the c wave down of the abcde Elliott Wave pattern.
Fearful market sentiment could signal that the recovery has bottomed out.
Since Bitcoin (BTC-USD) hit an all-time high of $74,000 in March, I have argued that the leading cryptocurrency would consolidate in a sideways correction pattern before rising to $100,000 and beyond. Despite recent short-term weakness, my analysis is that this remains the correct outlook and dips remain buying opportunities.
The recent decline appears to be the c-wave down of the abcde Elliott wave sideways triangle pattern.
Note that the recent low is only 5% above the May 1 low, which is a minor move in terms of Bitcoin. The price now appears to be recovering. While there may be a d-wave and an e-wave in the sideways pattern before the next big rally arrives, this is probably the best entry point we will see. Above 60k should confirm this analysis.
The Bitcoin Fear/Greed Index shows that fearful market sentiment is at current levels at the end of the last sideways correction, which led to the last sharp rally.
Sentiment should be fearful enough to bottom out here and allow for a rally back toward near the highs of the range.
Here is the daily chart
Note that back in September, when sentiment was in its current bearish range, price also pulled back to the confluence of the 50 and 200 day EMAs (blue and red respectively) and then began to move higher. It is in a similar position now. We also saw that in August/September, the daily RSI level pulled back to its green support area and formed a bullish divergence, just like it is now. On the bearish side, we have a trendline breakout and a pullback to the green trend channel after the breakout to the upside. However, these are consistent with bullish sideways correction periods.
Now let’s look at the weekly chart:
Here we can see that the weekly RSI has corrected to the same level as September. This is a solid technical reset without much price damage. I am now setting the wave count at 3 out of 4. The next bullish impulse wave will be 3 out of 5, with waves 5 typically being the strongest moves in Bitcoin bull runs.
Monthly Chart
Note that the blue 10-month SMA is key in a bullish move and is currently testing that level.
If the price does fall back to the 55-53k area, then I will have to re-evaluate this analysis and consider other scenarios. If the price exceeds 60k, we can have more confidence that we are on track to resume the long-term bull trend. It may take another period of volatility and fluctuations in this range to complete this correction mode, which will last about 2-6 weeks. Want to know more about the first-hand information and in-depth analysis of the currency circle? Hurry up and click on the homepage to view the introduction, bringing you the latest market analysis and high-quality potential currency recommendations every day
