Bitcoin: Advanced Elliott Wave Count Analysis 4H (May 05)

4 mag 2020

X Force Global Analysis:


Bitcoin has been demonstrating extremely volatile price movements, confusing both bulls and bears alike. In this analysis, we analyze both the bullish and bearish cases mainly through the Elliott Wave theory, substantiating each scenario with other indicators and previous analyses.

Bullish Scenario

- In our bullish scenario, the subminuette waves are counted in yellow.
- The minuette impulse wave (12345) is counted in orange.
- Based on the wave counts, we can conclude that the move from mid 5k levels up to 9.4k was the third impulse wave
- The current correction we are seeing could be interpreted as the fourth wave.
- We have currently found support on the 0.236 Fibonacci resistance, but a further test of the 0.382 Fibonacci support is also probable
- Should this impulse wave count turn out to be valid, we could potentially see wave 5 extend up to our previous high resistance at 10k
- 10k is also huge psychological resistance

- In our previous analysis, we have mentioned the use of ema (exponential moving average) ribbons as a sign of trend confirmations
- For the past three golden and death crosses generated by the ema ribbon, we have seen a 30-50% move.
- A move up to 10k, completing the fifth impulse wave, would be a 36% move from the ema ribbon cross
- It's also important to note that while divergences have been negated frequently recently, we have spotted a bullish divergence on the 4H
- Prices are creating higher lows, while indicators (Relative Strength Index, and Moving Average Convergence Divergence) are creating lower lows


Bearish Scenario

- For a bearish scenario, it could be said that we are already in a corrective trend after a Elliott Double Combo (WXY) wave count
- We have resistance and support as the same fibonacci levels as the bullish case
- In this scenario, we would see immediate corrections, given that 9.4k levels was the local top.

- For our bearish case, it's important to reference the envelopes
- Extensions above or below the envelopes have served as strong signs of Bitcoin being overbought or oversold
- On the daily, it can be seen that prices have overextended above the envelope resistance, at an unsustainable level
- Thus, based on the envelope indicator, a pullback into the envelope is highly probable

Market Sentiment:

Long short ratios are at 71 to 29, with excessive amounts of long positions than shorts. The market is overly bullish, and this may be fueled by greed.


What We Believe

We believe that both bullish and bearish Elliott Wave counts are highly probable. However, regardless of which scenario plays out, it's important to note that a correction is due - even for the bullish case. Should the bullish scenario play out, it's highly likely that the 5th impulse wave functions as a means to supply liquidity into the market, in order for bears fill in their big short positions, and trap late longs. As a result, despite two very different perspectives and sound evidence to support both cases, the best course of action is to approach the market from a cautiously bearish perspective for the mid term, as it prepares market participants for both scenarios.

Trade Safe.