BTCUSD: Another attempt at 50k? Elliott Wave Structure 8/28

Updated

BTCUSD: Another attempt at 50k? Elliott Wave Structure

For the first time since May 2021, Bitcoin printed a short-lived intraday high over 50,000 USD on August 23, after a remarkable rally from the correction lows near $30000. However, this price level could not be sustained and was followed in short order with a pullback in a descending price channel into a support zone between c. $46500 and $48100, provided by previous recent price action. It tested the bottom of that zone in multiple attempts, and reached a local bottom at 46300 with a wick. This zone has to hold in case of repeated declines to keep a near-term bull scenario in play. In testing this zone, weak long trades got thoroughly liquidated, but bulls succeeded in defending the 46k line. Recapturing the 48.1k level thereafter provided a minimum requirement for continued bullish sentiment. BTC swiftly gained about 3000 points in a 24-hour period into the close on Friday, 8/27, in an apparent three-of-five wave advance, with a correction proceeding in wave four throughout the night and morning hours of Saturday ( EDT ), 8/28. It arrived at a near 38.2% retracement in wave four with a sharp wick into the channel's bottom trend line , marking the apparent end of correction. After an upward move for a first wave in wave five of the entire uptrend, bears are retesting the bottom trend line at the time of writing.

Formidable resistance levels lie ahead not only at the psychological even-number level of 50k, but also beyond. More sustained buying volume is needed to maintain BTC's bullish direction to test additional levels. Spot supply seems low at exchanges, which can cause prices to accelerate in heavy buying, but it appears that the general public has not participated yet as much as in past rallies.

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I hope no Elliott Wave practitioner got shaken out by the break-down action overnight. It was certainly rather unexpected, but I got suspicious of the "fifth wave" attempt already right after pinning this post, when no clear impulse sequence developed. It was just diagonals, which are not fully developed impulses. An attempt at 50k cannot happen with that kind of stuff. So, the market backtested our support zone which stopped the fall. Formally, this can be interpreted as extending the fourth wave of the night prior, albeit printing a new local high. Ethereum never fell for this s**t, and didn't waste too much energy with a false high, sinking the ETHBTC chart from 0.0666 to 0.0656. It's been recovering since, and stands at 0.0661 at this time.
So, at this time it appears that another attempt at 50k is still in play. The former fourth wave is just the A-wave, B and C now being clearly complete as well. The overall retracement was right in the middle between 50% and 62%, a little larger than the majority of fourth waves. It looks a little strange, but valid, with a proper three-wave structure. It remains to be seen if this can sustain another rally to higher ground. BTC needs to maintain closing prices above the 200 DMA.

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Updated chart:

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Here is another interpretation of the data. I broke the diagonal at the bottom of the channel into another 1-2 sequence, which requires a second 3-4 sequence at the top, which now may have materialized as the break down overnight. That was in fact my first assignment early on, but It is hard to be preferential to either assignment, impossible in advance.

In this chart I correlated the 1-3, 3-5, and 2-4 correspondences with green and blue lines to guide the eye.

The outcome is essentially the same. But it is not clear that the action is actually finished. We need a clean 1-2 sequence, and then an impulse to warrant continuation of any assault on 50k.

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Since August 9, when the lower boundary of our current support zone was first formed, Bitcoin has moved essentially in a horizontal manner, pushing to the upside just a few times, twice to establish the top of the support zone at 48.1k, between 8/14 to 8/16, and the recent action above the support zone, with the penetration of the 50k area.
This has established the support zone as the rock and bottom of any moves upward from here. The recent testing of the bottom of the zone only reinforced its significance.
Trading in and above this zone recently represents a consolidation or correction of the entire way up from the July lows of 29k to 30k. The remaining question is the exact shape or form of this correction in terms of Elliott Wave patterns and the overall degree of those patterns. I believe action has evolved from an ABC flat correction with a 3-3-5 structure, to a 3-3-3-3-3 structure of a running triangle correction. Running triangles are very common, they print a new, false, high price, much like an expanding flat where the B wave forms the high price, rather than the "orthodox" top. In fact, I believe the latter occurred at the Bitcoin all-time-high.
So, I think the BTC market is at or very close to the end of such a pattern and price action might soon confirm this with a powerful move beyond 50k.
The current price action in the last chart update of this post can be reinterpreted another way to support this idea, by removing the first 1-2 sequence, and the corresponding 3-4, and replacing it with an A-B-C assignment, so that the remaining 1-2-3-4-5 structure forms the remaining part of wave D of a running triangle, and the breakdown of price last night is the E wave which terminates the macro structure.

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Chart of running triangle:

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I have the feeling that we may see one more test of the support area before this correction is over. The choppy uptrend may just be the B-wave of E, if that is the correct assignment.

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We saw indeed that, a decline into the zone and several hours of chopping there. If the market presented us with a triangle, we should see some kind of recovery pretty soon.

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c.tenor.com/mVVqpyto_nYAAAAC/rollercoaster-bitcoin.gif

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This morning, BTC and ETH finished what turns out to be a running triangle correction, stretching over most of August.
While ETH has already broken above the upper trend line of triangle, BTC is still trying to regain footing above its support zone at 48.1k.

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Price action since yesterday does not confirm a completed triangle correction.

I think the triangle is in fact not finished, but is still in wave D, as shown in this chart. I kept the old assignment in red, with the new concept in purple.

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Markets are deceiving: c.tenor.com/mVVqpyto_nYAAAAC/rollercoaster-bitcoin.gif

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Even completion of wave C is not obvious.

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But I think it is. If this observation is correct, BTC should rally to just above 49000 to touch the trend line (currently at c. 49250) and reverse down some distance for wave E. Wave E can be almost any size, and can even extend just below the lower trend line, which is at c. 46850 right now.
In the meantime, ETHUSD which appears to have indeed finished its correction, will swing up and down with BTC, but its overall trend is already up, and has already printed a new summer high just short of 3500 by ten or 20 dollars, causing ETHBTC to soar above 0.072. This push up by BTC will probably produce another push higher for ETHUSD.

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So far, so good.
BTC rallied to 48900 so far from about 46540. The top trend line is at about 49080 right now. Price might go farther, but should not run away. If it does, then the triangle idea is just that, an idea. The correction in that case is certainly complete in form of a running flat (ABC). The spike from 47.5k certainly had a lot of bullish character. A D-wave is a three-wave leg, which might be already defined.

BTC pushed ETHUSD to almost 3800.

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BTC just pushed a candle wick above the top trend line, to 49,125, and retreated immediately to the 48,800 area. We have to see whether this is just fake resistance and the run continues, or whether the triangle goes on. In the latter case we need an E-wave down.
The trend line can be adjusted upward to 49125, because the previous touching point in wave C is not a proper vertex. It was just a guide to draw the line.

ETHUSD seems also exhausted at this point, having pulled back to the low 3700s.

For the D-wave we can use the following assignment as wave count: a complete ABC leg.

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PS: my wave degrees are definitely off, (C) and (D) should be lower degree, but this is not important right now.

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BTC has pulled back about a thousand points, finding support right on our 48.1k support line. This looks just like a normal fourth wave correction, no real clue that a wave E is forming. The entire leg up may well be a 1-2-3 sequence rather than A-B-C. Time will tell.

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The BTC fundamentals appear rather favorable for a run on 50k soon and building a base there for assault on the critical 57k area, where there is a technical resistance from on-chain conditions. ETH is well positioned to take out the ATH in the coming days, perhaps this weekend.

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If BTC is intending to show us a triangle, then now is the time to turn around, and trace out an E wave, somewhere down to the 47,000s. It has printed what is perfectly suitable to account for the A and B waves of E. It has come back to the trend line it established earlier within 90 points, and stopped at exactly 49,000. It just needs a C-wave down.
... Or move on up.
Decision time.

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Good choice. The trend is your friend.

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But I am still not satisfied that the August correction in wave 4 is finished. This advance to over 50k is still short of the old high and could still simply be the D-wave of the triangle, forming essentially a barrier triangle, with the near-horizontal trend line at the top. This would mean the possibility of another visit to the 48k or even 47k zone. BTC needs to build solid support above 50k.

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The market seems to be confirming this notion that it is still trading inside the triangle. We have two tops above 50k in this latest leg of the triangle, wave D. They can mark the A and C termini of wave D, but the completion is not clear. The only clear structure is the main wave from the bottom of the triangle, wave A. It has a complete 5-wave structure.

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Chart of new triangle concept:

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The placement of the ((b)) and ((c)) endpoints is certainly not very satisfying. I think the down-wave that is forming is a better place for that. And then we still need the E-wave down.

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Meanwhile, this has forced ETHUSD into a triangle correction of its own circumstances, to correct the enormous advance it permitted itself while BTC was building its D-wave.

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What I think is wave E seems to have stalled at 48,350.
This may be a good entry point to add more to the bitcoin wallet. At least for a move into the upper fifties.

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Same for ETH, the low was 3711, and the target would be 4350 or ATH.

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BTCUSD is finally attacking 51,000.

The analysis of the E-wave was on target. Its bottom was a good entry point for the battles in the 50k space.

Here is the end of the large August triangle of BTC:

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Perhaps there is a better count for the D-wave. I am not totally satisfied with the placement of (a), (b), and (c).

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BTC needs a few daily closes above 50k, perhaps today will be the first.

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The week after Labor Day, corporation and other institutional investors are usually expected to report on purchases during the summer months. This could provide quite a bit of volatility for BTC, and could potentially enhance the bullish outlook in the media, getting more small investors, the general public to start buying into this rally. From some analyses the general public has not participated yet as much as in previous runs.

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It looks like BTC has been successful in building some base around the 50k level since capturing a 51000 valuation for a brief moment yesterday morning. The bears have been back-testing the 50k level vigorously and this may be ending, with BTC having sustained no losses deeper than about 500 points below the mark, notably between the 38.2% and 50% retrace levels of the move to 51k. Advance beyond 50600 should confirm continuation of the up-trend with the 55k to 57k area in view. This could happen quite rapidly during the long weekend in the US.

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It is always amazing how long corrections can be extended. What looked like an ABC at first, became perhaps a triangle, and finally looks like a double-three (flat+triangle), or a triple-three. The market split its time in this area perhaps a little more time below 50k, than above, with the regression channel sloping down slightly. It finally did manage almost 61.8% retracement, and appears poised now for upside continuation to challenge 51k again. Low spot reserves on the exchanges might accelerate prices toward 57k in the near future. There is apparently some spot to absorb from select whales, but it does not seem to improve spot levels much. Cryptopotato has some good reviews of that.

In any case, long sideway corrections are bullish and build base. A weekly close above 50k would be a good signal.

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The weekly close is close to 52,000, a stellar result from the last day, and a strong bullish signal. There is a large wall of sell orders on the books at 52,000 so it might take some more effort to absorb them. Further upside for this week should be expected, until 56000, where sell orders appear to form another clear barrier.

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BTC has been pretty relentless at carving away at the sellers before and around 52k, with multiple pushes into the zone. Day could close well above 52000.
I think a new ATH for Bitcoin is not far away. This could accelerate very quickly.

unbeldi

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