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Outlining Bitcoin’s Possible Wave Count

2 mins
Updated by Gerelyn Terzo
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In Brief

  • The Bitcoin price has possibly completed a W-X-Y correction.
  • The price might have broken down from a parallel ascending channel, but is still following an ascending support line.
  • As long as the price stays above the $8,500 horizontal support level and the ascending support line, the possibility of a bullish wave count remains valid.
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The Bitcoin price has been decreasing since it reached a high on May 8. It has reached an important support level, a breakdown from which would indicate that the upward move beginning on March 13 has ended.
Well-known cryptocurrency trader @CryptoCapo_ outlined a bearish wave count for BTC that shows that the price is nearing the end of this retracement and will eventually break down from its channel.
BTC Wave Count
Source: Twitter
He stated that the current movement is a retracement rather than an impulsive formation since the price is trading inside a perfect channel:
A perfect channel means that this is not an impulsive pattern.
This means that if the current movement was an impulsive pattern that would eventually lead to higher prices, the price would have over/under-thrown the resistance or support lines of the channel before moving back inside it. In the image below, we have outlined a possible wave count since the March 13 low, in which BTC has already completed a W-X-Y correction. It is possible to draw a parallel ascending channel which encompasses all of the highs and lows, however BTC has just broken down from it. Therefore, while this could definitely be a W-X-Y correction that has been completed, and the price will move downwards as a result, the parallel channel does not seem like a valid enough reason to make this claim.
Bitcoin Corrective Wave Count
Bitcoin Chart By Tradingview
If the upward movement is considered a correction, than the ensuing downward movement would be the impulsive formation, and BTC would soon decrease at an accelerated rate, once it breaks down from the possible ascending support line it has been following since March 13.

Bullish Possibility

However, the price is still following the aforementioned ascending support line and is trading near the horizontal $8,550 support level. Until the price breaks down from it, the possibility that this is an impulsive five wave formation is still there. If so, the price is currently in wave 4, which is correcting inside an a-b-c-d-e triangle. A breakout above the dashed resistance line would increase the likelihood that this is the correct formation.
BTC Bullish
Bitcoin Chart By Tradingview
To conclude, the BTC price is trading at a crucial support level. Whether it breaks down or bounces from it will be pivotal in determining the direction of the future trend.
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Disclaimer

In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

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Valdrin Tahiri
Valdrin discovered cryptocurrencies while he was getting his MSc in Financial Markets from the Barcelona School of Economics. Shortly after graduating, he began writing for several different cryptocurrency related websites as a freelancer before eventually taking on the role of BeInCrypto's Senior Analyst. (I do not have a discord and will not contact you first there. Beware of scammers)
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