The sharp decline in early August has brought Bitcoin's price structure into sharper focus. Observing the market action from this year's high, an expanding triangle pattern emerged into July's low. The rally following this drop appears to be an X-wave. However, until further downside confirms it, we cannot definitively say the X-wave is complete. Regardless, it seems clear that Bitcoin is entering or has entered a bearish phase.
NeoWave Tenets and Current Trend Direction
A fundamental principle of NeoWave theory is that the most significant and rapid price movement on the chart usually indicates the trend's direction. In this scenario, the drop following the X-wave is notably the largest and fastest movement we've seen. This suggests that the prevailing trend for Bitcoin is downward and could remain so for several months.
Future Expectations and Possible Scenarios
If Bitcoin stages a rally that surpasses the X-wave, it could signal strength. However, if this rally is sluggish or lacks momentum, it could indicate that the market is forming a higher low, which would suggest the current correction is not yet complete.
In conclusion, while the bearish phase appears to be underway, close monitoring of Bitcoin's price action in the coming weeks will be crucial to determining the strength and duration of this downtrend. The key will be to watch how Bitcoin responds if it revisits the levels around the X-wave.
