Is Bitcoin’s Dip Buying Opportunity Here?
Dr. Arnout ter Schure | Apr 16, 2024 03:22PM ET
Three weeks ago, we showed Bitcoin (BTCUSD) continued to follow the fractal with the January 2021 correction, and based on our Elliott Wave Principle (EWP) analyses, we found that
“… we should expect BTCUSD to bottom out at around $57.5K, close to the $55080 level mentioned earlier and the $54-57K target zone for the grey W-c. Of course, BTCUSD does not have to follow the same path as in 2021 and could have already bottomed out … more likely, it may provide us with a flat (3-3-5) correction, which targets ~$74+/-1K first, then drops back to ~$60+/-1K before liftoff. Regardless, we remain bullish over the long term for BTC and expect it to reach at least $100K, with an adjusted upside target of $ 150+/25 K.”
Fast-forward, and BTCUSD topped on April 8 at $72750, dropped, and over the last three to four days, it has been trading around $62+/-1K. Thus, our forecast for “a flat (3-3-5) correction, which targets ~$74+/-1K first, then drops back to ~$60+/-1K before liftoff,” has come so far to fruition. That is the power of the EWP because few, if any, foresaw this path. Moreover, our analysis of this correction, which we started covering in early March, has so far not been disproven. Therefore, we now anticipate the correction to be in its final stages. See Figure 1 below.
Figure 1. The daily chart of BTCUSD with several technical indicators and a detailed EWP count.
As stated, a flat correction (a-b-c) comprises a 3-3-5 pattern, and BTCUSD should now be wrapping up the final (orange) 5th wave to ideally $60-62K, possibly as low as $56-59K. See the orange and grey target zone boxes in Figure 1 above. Once complete, the next question is, how much can we expect the cryptocurrency to rally? We can use simple technical/chart pattern analysis to answer that question. See Figure 2 below.
Figure 2. The daily chart of BTCUSD shows a potential bull flag pattern.
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Figure 2 shows a potential Bull-flag pattern that targets ~$98K, 55% above today's levels. In 2021, we saw a 100% rally from the lows, but that is not a guarantee that will also happen now. In fact, given the law of diminishing returns because of the logarithmic growth curve BTCUSD follows, which flattens out over time, a rally of less than 100% is more likely. Flag patterns are among the most reliable continuation patterns because they are all quite similar and tend to appear in similar situations to existing trends. However, as of now, the pattern has not been confirmed, and it is only on a break above the upper trendline of the flag. Thus, although we remain bullish over the long term for BTCUSD and expect it to reach $150+/25 K, for now, it is a potential pattern, albeit highly likely.
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