It has been a few weeks since I last wrote an update on Bitcoin (BTC), but the price action since then (August 11, see here) has been a bit tricky to interpret. That is fine as markets, including cryptocurrencies like BTC, move from “clear” to “less clear” and back to “clear” constantly. In other terms, nobody has all the correct answers all the time.
Back then, BTC was trading at $46500s and has hovered below the critical $50K level ever since as it is now trading at $49500s. That’s 6% higher, and my initial assessment of a wave-1 top back then was wrong. With three weeks of additional data available, a clearer picture emerges: either the anticipated 2nd wave was delayed and is still happening soon. Or BTC will not look back and rally quickly to $60K first as a pitstop to $90K+. See Figure 1 below. Allow me to explain.
Figure 1. Bitcoin daily charts with detailed EWP count and technical indicators.
A breakout targets $60K, while a breakdown targets $42K
Over the last three weeks, the price action has placed Bitcoin in a “pay me now or pay me later” position. Either it is setting up as a -in Elliott Wave Principle (EWP) terms- nested one-two setup (Figure 1A) or it is topping out (Figure 1B). The difference between the two options is simple: breakout above the mid-August high ($50514, labeled as either (grey) minute wave-i in Figure 1A) and then wave-iii of (green) 3 of (red) iii, etc. is underway targeting $60K.
Contrarily, a breakdown below the recent lows at around $46245 (about equal to the 200-day simple moving average), with full confirmation below $43840, means (green) wave-c down to $40-44K is underway to complete (red) wave-ii. From there, BTC can then start its rally to $90K. Thus, thanks to the EWP, we now have straightforward if/then scenarios with associated price levels to know which of the two it will be. Trading does, IMHO, not get much simpler than that.
Bottom line: BTC decided it was not ready to roll over yet three weeks ago and tagged on a few more waves that have now allowed it to set up for either a direct breakout above $50514 to $90K+ with an initial pitstop at around $60K. Or it will break down below the late- and mid-August lows to target $42K+/-2K first before setting up for a rally to $90K+. We should know soon enough, and my premium crypto trading members, as well as those who subscribe to my automated crypto trading alerts, are ready either way.
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