Bitcoin: False breakout? Or Can It Now Reach $50,000+?
Dr. Arnout ter Schure | Jan 29, 2021 04:07PM ET
In my last two articles (see here and here) I have kept you abreast of where Bitcoin (BitfinexUSD) should top and bottom by using the Elliott Wave Principle (EWP) and Technical Analyses (TA). Combined and applied correctly, it is still one of the best ways to analyze and forecast markets, although, it is not falable. The question now is, what is next?
To answer that question, let's first go back to last week, where I found.
"BTC … should bottom soon (next few days) and then rally to new ATHs between, ideally $55-60K, in the subsequent weeks. The bulls will be in trouble on a weekly close below $28.4K as that can target the next lower support zone at $23-22K"
So far so good, BTC bottomed on Wednesday at $29,236, which fits very well with last week's insight that "at around $29,700 is the preferred target zone" and "$29K+/-1K as a more likely support zone for the wave-iv." Besides, it appears to have completed a wedge-shaped pattern, which can be called a bull flag. Price always moves powerfully out of such patterns, like today. Thus, as long as this week's low holds, we should expect BTC to start reaching for $55-65K for (red) intermediate-v of (black) major-3. See the upper right corner of the daily chart below.
Figure 1. Daily Bitcoin candlestick chart, with detailed EWP count and technical indicators:
For those of you who like a bit more detail and lower resolution to allow quicker trading, the hourly chart below shows my micro-EWP count since the ATH was struck early-December last year. From a technical analyses' perspective, there was a nice positive divergence building on the hourly MACD (dotted green arrow). The price has broken above the blue downtrend lines (small, green arrows). Thus, so far, the breakout is technically sound. Besides, from an EWP perspective, BTC completed five (grey) waves down from the $40K bounce high and reached almost the ideal (green) c=a, (orange) 5=1, and (grey) v=i targets. But in bull markets, downside disappoints and upside surprises, though $29,236 vs. $28,500 +/-500 and is still well within the margin of analytical error.
Figure 2. Hourly Bitcoin candlestick chart, with detailed EWP count and technical indicators:
Get The News You Want
Bottom line: If this week's low holds, BTC should be on its way to $55-65K. If this week's low is broken, then the current correction is becoming more complex, and the next lower support zone at $23-22,000 should then be expected before the next rally starts.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.