Bitcoin Analysis

10:50 a.m. New York time

What’s happening now? Bitcoin futures continue to trade in a narrow range, as has been the case since May 12.

What does it mean? The sideways pattern is an upward correction, the next-to-the-last segment of a downtrend that began on March 28.

What’s the alternative? There’s some ambiguity in the chart, and the sideways pattern could be a degree smaller, the next-to-the-last segment of a downtrend that began on April 21.

[Bitcoin futures at 10:50 a.m., daily bars]

What does Elliott wave theory say? Under my principal analysis, the sideways pattern is an upward correction, wave 4{-4}, within downtrending wave 3{-3} within downtrending wave C{-2}. The C wave is the third and probably final wave within a large downtrending correction, wave 4{-1}, which began on April 14, 2021.

Under my alternative analysis, the sideways pattern is uptrending wave 4{-5} within a series of downtrending waves, each of greater degree: Wave 3{-4} within wave 3{-3} within wave C{-2}. As is the case with the principal analysis, the alternative is within wave 4{-1}.

Wave 4{-1} is the next-to-the-last wave are playing out within a very a large uptrend, wave 5{0}, which began on December 14, 2018.

So, for the near term, wave 4{-1} is in its last leg, and when that’s done, will have reached its end. It will be followed by wave 5{-1}, an uptrending wave. Fifth waves have a lot of variety. They can extend and cover a surprisingly large distance. They can be truncated and reach their end with unexpected rapidity. There’s no way to know for sure how it will play out.

For the longer term, the end of wave 5{-1} will also be the end of wave 5{0}, which is six months away from completing its the fourth year of its rise. It will be followed by an equally massive downtrend.

Bottom line: Wave 4{-1} has lasted for more than a year, and I would anticipate that uptrending wave 5{-1} could be of equal or greater length. That’s an expectation, not a certainty. However, the end of wave 5{-1} will mark the beginning of a downtrend, wave 5{0}. Bitcoin is too new to know what wave the degree above {0} is in. For convenience call it wave 1{+1}. The decline after the end of 5{0} would, in that case, be wave A{0} of wave 2{+1}. Second waves tend to retrace a large amount of the preceding 1st wave. We don’t know when the 1st wave began, but the low point on the futures is 3,120, the end of wave 4{0}. So we can certainly expect wave 2{+1} to move below that level, several years from now.

We Are Here.

These are the waves currently in progress under my principal analysis. Each line on the list shows the wave number, with the subscript in curly brackets, the traditional degree name, the starting date, the starting price of the S&P 500 E-mini futures, and the direction of the wave.

  • Futures:
  • 5{0} Intermediate, 12/14/2018, 3,120 (up)
  • 4{-1} Minor, 4/14/2021, 65,520 (down)
  • C{-2} Minute, 11/10/2021, 69,355 (down)
  • 3{-3} Minuette, 3/28/2022, 46,550 (down)

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, in the ever-changing markets, 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, June 6, 2022


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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