Bitcoin Analysis

3:20 p.m. New York time

What’s happening now? Bitcoin remained below yesterday’s high, 49,500, staying within 3000 points of that peak.

What does it mean? The high is part of the middle wave of a rise that began January 27 from 29,075. The middle wave will be followed by a shallow pullback, and then a push to a new high. The middle wave will be followed by a shallow pullback and then a final push to the upside.

What are the alternatives? The middle wave could be complete at 29,075, although nothing in my analysis requires that the price won’t continue to rise before the middle wave is complete.

[Bitcoin futures at 3:30 p.m., 2-hour bars, with volume]

What does Elliott wave theory say? The present rise is wave 3 of Subminuette degree. Elliott’s rules require that the 3rd wave not be the short of three waves in the direction of the trend. Subminuette 3 is already longer than it’s 1st wave counterpart, and so there are nothing in Elliott that requires the wave to continue rising, nor anything that precludes a continued rise.

Subminuette 3 will be followed by a correction, wave 4 of Subminuette degree, and then a final 5th wave to the upside. Fifth waves can be short, over quickly, or can extend for a significant distance to the upside. It’s impossible to say at this point which scenario will play out.

Learning and other resources. Elliott Wave International has long been the leading analytical house based on Elliott wave theory. They make available a number of free educational materials and other resources, in addition to their for-pay subscriptions.

I recommend two books, both by people associated with EWI.

First, Elliott Wave Principle by Robert Prechter and A.J. Frost is the book that, along with Prechter’s analyses, that created the revival of Elliott wave theory. I first read it in 1984, and it has had a profound influenced on my thinking about markets ever since.

Second, I’ve found Visual Guide to Elliott Wave Trading by Wayne Gorman and Jeffrey Kennedy, both of EWI, to be a useful book that relates Elliott wave theory to practical trading. The authors are hands-on Elliotticians, and for an active trader, that’s exactly what’s needed — less theory and more how-to. The first chapter of the book gives a very nice thumbnail run down of what Elliott wave theory is all about.

Terminology. Here are some links to information about some of the technical jargon I use.

Charts. On my charts, waves have a subscript showing the degree above or below the Intermediate degree. Here are the subscripts and the degree each represents:

  • {+3} Supercycle
  • {+2} Cycle
  • {+1} Primary
  • No subscript: Intermediate
  • {-1} Minor
  • {-2} Minute
  • {-3} Minuette
  • {-4} Subminuette
  • {-5} Micro
  • {-6} Submicro
  • {-7} Minuscule

By Tim Bovee, Portland, Oregon, February 12, 2021


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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