Outlining Every Possibility for Bitcoin’s Correction (Part 2)

In our previous article from last month, we outlined four possibilities for Bitcoin’s correction. Two of those, more specifically possibilities (2) and (4) in that article have been invalidated. In this one, we will revisit the remaining predictions to see how they have fared and if the price is likely to follow the outlined movement.

End of the Correction

The first proposal that is still not invalidated suggests that this is a new upward move, since the correction ended in December 2018. The movement since has been the beginning of a new five-wave Elliott formation, inside which the price is currently in the third wave. This possibility is mostly supported by the strong bounce at the 200-week moving average (MA), both in December 2018 and March 2020. However, the price has reached the descending resistance line that has been in place since December 2017, validating it for the fourth time. For this possibility of this wave count to be the correct one, BTC has to break out above this trend-line and preferably reach a higher high relative to the price in July 2019, which would be confirmed by a movement above $14,000.

Triangle Correction

The other possibility is that the BTC price is still in a correction that has taken an A-B-C-D-E formation, inside a symmetrical triangle. The price is currently inside the (D) wave, which is also taking an A-B-C formation (red). For this formation to be the correct one, the price has to be strongly rejected by the resistance line, then begin a downward A-B-C correction, which is likely to end near $6,000. What the recent increase seems to have invalidated is a decrease below the (C) wave, making it likely that the March 13 bottom will be the bottom for the foreseeable future.

Bitcoin Chart By Trading View

Short-Term Movement

On April 30, the Bitcoin price created a shooting star candlestick, which is known as a bearish reversal candlestick. In addition, the candlestick was created with very significant volume. The fact that it is occurring right at the previously mentioned resistance line increases its significance. While the price has created bullish candlesticks in the three days since, they have been very small and had minimal volume. Furthermore, we can see that Bitcoin has been following an ascending support line (dashed) since the March 13 bottom. In the bullish scenario, the price will decrease towards this support line, bouncing on it then beginning an upward move that causes a breakout above this long-term descending resistance line. The bearish scenario outlines a similar decrease at the current resistance line. However, afterwards, it states that the price will get rejected at the resistance line once more, before breaking down from the ascending support line (dashed) and decreasing towards $6,000. Therefore, the reaction to the ascending support line is likely to determine if the BTC price will break out from the long-term descending resistance line or not.

Conclusion

To conclude, the BTC price has reached a very important resistance line that has been in place since the December 2017 all-time high. The price is expected to get rejected at this line and decrease towards the newly created ascending support line at $8,000. The reaction to this line, more specifically whether the price breaks down or initiates a bounce, will determine if BTC will break out from the long-term downtrend or not. In both scenarios, it seems that the March 13 low will act as the low for the foreseeable future.