Bitcoin Analysis

2:25 p.m. New York time

What’s happening now? Bitcoin futures have reached a high of 46,835 so far today, the highest since the present uptrend began on June 22 from 28,800.

What does it mean? The rise is an uptrending movement within a larger upward correction that in turn is part of a still larger downtrend. The completion of the present uptrend will be followed by a downward movement that will remain above 28,800, and then another upward movement that will complete the correction. That final upward movement will remain below the April 14 peak, 65,520.

What’s the alternative? The June 22 low can be counted as the end of the first leg in a downward correction, to be followed by an upward movement and then a movement still lower. The correction will be followed by a rise that will be above the April 14 peak of 65,520, perhaps significantly higher.

[Bitcoin futures at 2:22 p.m., 8-hour bars]

What does Elliott wave theory say? By my principle count, the June 22 low completed wave 1 of Micro degree, part of a major downtrend that began with the peak on April 14 with the end of wave 5 of Micro degree. Wave 2 of Micro degree is underway, and internally is nearing the end of wave A of Submicro degree, a five-wave rising structure within a Zigzag correction. Submicro A appears to be in Minuscule wave 5, the final wave of the structure, and will be followed by wave B of Submicro degree to the downside and then a Submicro wave C that will move beyond the A-wave’s peak. All of that will be followed by wave 3 of Micro degree, a significant decline to new lows.

By my alternative count, the April 14 peak ended wave 3 of Micro degree and the subsequent decline is wave A of Submicro degree within wave 4 of Micro degree, a downward correction that is most likely a Zigzag, since the A wave clearly has five subwaves. The rise that began June 22 is wave B of Submicro degree. Under this scenario, the completion of wave 4 of Micro degree will be followed by wave 5 of Micro degree, which will carry the price to new heights, perhaps significantly so.

At this point under the rules of Elliott wave analysis, there is no way to say which scenario the market will follow. Since Bitcoin allows for bull trades only, my plan is to trade the Micro degree. Using the principle analysis labelling, I’ll sit out the internal 5th wave of Micro wave A, and the decline of Micro wave B. From the B-wave low, I’ll re-enter my positions and ride Micro wave C to a new high. The same plan works for the alternative analysis, but with different labels.

Learning and other resources. Elliott wave analysis provides context, not prophecy. As the 20th century semanticist Alfred Korzybski put it in his book Science and Sanity (1933), “The map is not the territory … The only usefulness of a map depends on similarity of structure between the empirical world and the map.” And I would add, we can judge that similarity of structure only after the fact.

See the menu page Analytical Methods for a rundown on where to go for information on Elliott wave analysis.

By Tim Bovee, Portland, Oregon, August 11, 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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