On June 26, 2019, the Bitcoin price reached a high of $13,764. It has been decreasing since. BTC/USD is likely in a correction. Today, we are going to analyze two possible patterns this correction might take.
This is a detailed analysis of two possible correction patterns.
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Bitcoin Price: Correction Types
Below we are going to analyze two types of corrections: the A-B-C and the W-X-Y correction.
Both the A-B-C and the W-X-Y corrections consist of three waves.
However, the count of sub-waves is different.
An A-B-C correction has a 5-3-5 wave count, while a W-X-Y has a 3-3-3 count.
Bitcoin Price: A-B-C Corrections
If the Bitcoin price is following an A-B-C correction, then the most likely scenario is that we have already completed it.
The full wave count is outlined below:
We can see above that:
- The A wave consists of five sub-waves.
- The B wave consists of three sub-waves.
- The C wave consists of five sub-waves.
In this scenario, the new uptrend has already begun.
The main reason we do not believe this is the case is the length of time that this correction has been completed in.
The five-wave uptrend which preceded this Bitcoin price correction lasted for a total of 85 days, with individual waves ranging from 8 to 19 days.
According to our wave count, the A-B-C correction ended after five and a half days.
A correction of five days in response to an 85-day uptrend would be highly unusual.
Furthermore, the correction amount is still quite small in response to the prior massive increase.
Bitcoin Price: W-X-Y Corrections
If the Bitcoin price is following a W-X-Y correction, then we have completed the W wave and are currently in the X wave — with the Y wave still to follow sometime after.
We can see in the image above that:
- The W wave consists of three sub-waves.
- The X wave consists of three sub-waves.
- The Y wave consists of three sub-waves.
Since the length of the waves should be somewhat equal, then we might still continue to increase for one or two days, and then begin the final Y wave.
The length of this correction is more similar to a downward move that succeeds an uptrend of 85 days.
The W wave took five and a half days to finish.
If the other two waves are of similar length, the correction shall take around 17 days to complete.
In the previous section, we stated that the individual waves of the correction took from 8 to 19 days to be completed.
A 17 days correction would fall within that range.
The Bitcoin price has either completed an A-B-C correction or is in the process of completing a W-X-Y correction.
Due to the length of the time it has taken it to complete these waves, we believe that the W-X-Y correction is more likely.
Do you think the Bitcoin price has finished its correction? Let us know in the comments below.
Disclaimer: This article is not trading advice and should not be construed as such. Always consult a trained financial professional before investing in cryptocurrencies, as the market is particularly volatile.
Images are courtesy of Shutterstock, TradingView.