Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Bitcoin: Is This Another Buyable Pullback?

By Dr. Arnout ter Schure CryptocurrencyJan 11, 2021 03:06PM ET
www.investing.com/analysis/bitcoin-is-this-another-buyable-pullback-200555584
Bitcoin: Is This Another Buyable Pullback?
By Dr. Arnout ter Schure   |  Jan 11, 2021 03:06PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

With Bitcoin (BitfinexUSD) already down 25% from its recent all-time-high, it is very reasonable to ask if this mini-flash crash is another buying opportunity or if BTC should be avoided at all costs. Using the Elliott Wave Principle (EWP) and Technical Analyses (TA) combined, I will share some of my insights I provide daily to my premium cryptocurrency members. See my daily update video from last Friday here.

In my article from mid-December, I was looking for Bitcoin to reach $23,700+ based on a standard Fibonacci-based impulse pattern. Boy, did I get a lot more than bargained for: $40K+. Indeed, as said in prior articles: in bull markets, upside surprises and downside disappoints.

So why did BTC trade so much higher?

Because it experienced an extended 5th of a 5th wave. They can always happen and are impossible to know beforehand: anticipate, monitor and adjust is all we can do. How to possibly trade them and not be left behind? Raise stops to prior day lows, take partial profits on the way up, and if stopped out but then the instrument moves to new highs again, buy the breakout. Ad infinitum, aka “rinse and repeat” until it stops working.

Figure 1: Daily Bitcoin candlestick chart, with detailed EWP count:

Bitcoin Daily Candlestick Chart With Detailed EWP count.
Bitcoin Daily Candlestick Chart With Detailed EWP count.

The daily chart above sports the micro-EWP count for BTC and shows the perfect sub-dividing impulse pattern higher since mid-December. Every single price move can be accounted for with a wave label. Picture-perfect. We know the beauty of an impulse move after wave-3 comes wave-4, and after wave-4 comes wave-5, on all wave-degrees. Thus, with one of the larger pullbacks in BTC now under way since late-December and November last year (in percentages), it is logical to place a (red) intermediate-iii/c label at the recent ATH. Why both an iii and a c-label? Because one never knows beforehand if it will be three waves or five waves in either direction (up or down). Given the strength of the recent rally, I prefer the wave-iii label, and which I will focus on here, but I must remain objective until one EWP count or the other is disproven by the markets.

Thus I prefer to see the current decline as a (red) intermediate wave-iv, which should ideally bottom around the 38.2% retrace of the entire (red) intermediate wave-iii rally that started since the September 2020 low: $29,680. Today, we already reached as low as $30,300, which is close to that retrace-level and could be all of wave-iv. However, I view this wave-iv as a multi-week event, and I, therefore, expect at least a bounce back soon to around $36,130-39,210 before the next leg lower starts. That would complete a simple a-b-c lower, but 4th waves are known to be notoriously tricky and could morph into something more complex, such as a flat or a triangle (see here). We’ll have to deal with that as it unfolds.

For now, the short-term downside risk seems to be small as several indicators are already close to oversold, such as the daily RSI5. It already warned of a correction due to the slight negative divergence (red dotted arrow). What supports higher prices, once this wave-iv is complete, is the strength of the MACD and the money flow indicator (MFI14). A lot of money is flowing into BTC, even on a weekly timeframe (not shown), but it is now very overbought and needs a breather, which is now on our hands.

Thus, I prefer this wave-iv to bottom at around $29K +/-1K over the next one to two weeks before wave-v to new ATHs kicks in. It is most likely to be around $50-60K to complete an even larger 3rd wave (major-3). Then the next 4th wave (major-4) should occur, etc. I do not view the rally since 2018 complete until we see at least two more, even larger rallies, from that major-4 low with six-digit upside targets.

But let’s not get too greedy and focus on the more intermediate-term instead. Although BTC could move back to $18K+/-2K without any problem, I view the $29K+/-1K as a more likely support zone for the wave-iv. And remember “upside surprises and downside risk.” A break and close below $28,400 is the first warning of worse things to come as then next support is not until $23Ks

Bitcoin: Is This Another Buyable Pullback?
 

Related Articles

Crypto Briefing
Is Tether’s USDT Going To Pull A UST? Probably Not By Crypto Briefing - May 19, 2022

USDT’s recent slip below a dollar has left investors questioning its stability.Key Takeaways Following Terra's UST collapse, Tether's USDT market cap has dropped by over $9...

Bitcoin: Is This Another Buyable Pullback?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (10)
Momentum Tradarn
Momentum Tradarn Jan 21, 2021 12:27PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
👏👏
Mats Tjernberg
Mats Tjernberg Jan 17, 2021 3:35AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Like a clock.
Ali Banava
Ali Banava Jan 14, 2021 12:03PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Dr. Arnout, is this waive today the bounce back to $39k and thus the beginning of next leg lower?
Brian Springer
Brian Springer Jan 13, 2021 4:46PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
no doubt
Notvery Goodathis
Peteymcletey Jan 12, 2021 12:30AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I see two outcomes coming - up or down
Dr. Arnout ter Schure
Dr. Arnout ter Schure Jan 12, 2021 12:30AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
yes, those two outcomes are always the only two for any asset. Now determine which is the most likely outcome. That is what really matters.
Edward Chong
Edward Chong Jan 11, 2021 11:48PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
arnout if u buy. i will buy.
Francesco Lucchesi
Francesco Lucchesi Jan 11, 2021 7:19PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
of course it is. it has solid fundamentals
Johnny Crash
Johnny Crash Jan 11, 2021 5:52PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Ajayi Aquila
Ajayi Aquila Jan 11, 2021 5:52PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
hello like us to be friends
Roopeshakumar Shalgar
Roopeshakumar Shalgar Jan 11, 2021 5:39PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
AweSome!🙏
Mats Tjernberg
Mats Tjernberg Jan 11, 2021 3:31PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
👍
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email