Bitcoin Analysis

3:10 a.m. New York time

What’s happening now? Bitcoin futures fell below 50,000, reaching as low as 49,320 and then retreating upward.

What does it mean? The decline could be a correction within the rise from January 27 that hit a high of 57,790 on February 21.

What are the alternatives? It could also be the beginning of a significant downward movement that will carry the price into 30,000s and perhaps lower.

[Bitcoin futures at 3:11 p.m., 140-minute bars, with volume]

What does Elliott wave theory say? Under the rules of Elliott wave analysis, wave 5 of Minuette degree as met the minimum internal requirement: A five wave upward movement in which the middle wave is not the shortest. That’s not a guarantee that wave 5 is complete. The present dip down could reverse and move to yet a new higher high, or it could continue downward. A drop below 43,950, the end of Minuette wave 4, would strength the case that the February 21 high marks a significant reversal point. A drop below 29, 075, the low set on January 27, the start of wave 5 of Minuette degree, would make the reversal theory even more likely.

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 xx, 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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