According to Elliott Wave Theory technical analysis principle, Bitcoin correction is likely to continue as Bitcoin falls below $35,000 during Russia-Ukraine conflict.
The theory divides the price cycle into two parts, one consisting of five upward trending impulse waves and the other three consecutive corrective waves. The Elliott Wave theory now suggests that BTC is likely to fall into the $25,500 region in 2022.
At the heart of the bearish outlook is the predictable record of cyclical highs and lows throughout Bitcoin’s market history, as illustrated in the chart below.
Weekly BTC/USD price chart with Elliott Waves | Source: TradingView
Bitcoin chart shows three main impulse waves (1, 3 and 5 in red) and two corrective waves (2 and 4 in red). The fifth wave is still under development and underscores the potential of BTC to reach the $100,000 region in the future. But taken together, these five waves show that the market’s bullish structure is likely to be exhausted at wave 5, followed by three corrections: A, B, and C.
Meanwhile, each major wave marked in red consists of sub-waves, there are 5 forward (impulse) waves in the direction of the trend (black 1 to 5), followed by 3 countertrend corrections (from a to c in blue).
Weekly BTC/USD price chart with partial waves | Source: TradingView
From 2012 to 2018, bitcoin price rose continuously from wave 1 to wave 5, followed by a correction from wave a to wave c. Each time, wave c, which coincides with the Bitcoin exponential moving average (50-week EMA), marks BTC’s lowest price and the completion of the Elliott wave cycle in 2015 or 2018.
After 2018, Bitcoin entered a new Elliott wave cycle. It has experienced five bullish waves from nearly $3,200 in December 2018 to around $69,000 in November 2021 and is currently in the process of three corrective waves waiting for the final C-wave to form.
Weekly BTC/USD price chart with an ongoing Elliott wave cycle | Source: TradingView
Looking ahead to the next wave, c is emerging around the 200-day EMA, suggesting that BTC is likely to return to the $25,500 area in the near future.
As the crypto market undergoes a sharp correction, many indicators are suggesting that BTC may have bottomed.
BTC price chart | Source: TradingView
The Ichimoku cloud is one of the most used cryptocurrency indicators in the market, reflecting both support and resistance zones and identifying current trends in the market. While Bitcoin’s daily chart shows the leading cryptocurrency underperforming, the situation is different on the weekly chart.
According to the weekly chart, Bitcoin is currently trading at the bottom of the Ichimoku cloud, which often acts as a strong area of support. Bitcoin’s last bounce came on Jan. 24 when the price touched this support level.
As per the past price action, bitcoin has accumulated and bounced out of the $34,800 area, which can be considered the bottom for the current correction.
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