Bitcoin's Bottoming Out: A Technical Analysis
Seeking Alpha5 days ago
890

Bitcoin's Bottoming Out: A Technical Analysis

Bitcoin
BTC
TechnicalAnalysis
Cryptocurrency
ElliottWave

Summary:

  • Bitcoin is consolidating in a corrective pattern before potentially advancing to $100,000.

  • The recent drop appears to have been the c-wave down of the abcde Elliott Wave sideways triangle pattern.

  • The Bitcoin Fear/Greed Index suggests that sentiment should be fearful enough to put in a bottom here and allow for a recovery rally back near the highs of the range.

  • Price is in a similar position as in September, when it corrected to the convergence of the 50 and 200 day EMAs and then took off.

  • Price above $60,000 would confirm this analysis and suggest a resumption of the long term bull trend.

Bitcoin: Bottoming Out Or Breaking? (Technical Analysis)

Bitcoin is consolidating in a corrective pattern before potentially advancing to $100,000.

Since Bitcoin (BTC-USD) reached an all-time high near $74,000 in March, it has been consolidating in a sideways corrective pattern. This analysis suggests that this is a buying opportunity and dips should be seen as opportunities to enter the market.

The recent drop appears to have been the c-wave down of the abcde Elliott Wave sideways triangle pattern. The recent low only exceeded the May 1st low by 5%, indicating a tiny movement in Bitcoin terms. Price appears to be recovering now.

Key Indicators:

  • The Bitcoin Fear/Greed Index shows that fearish market sentiment was at about these current levels at the end of the last such sideways correction, leading to the last big rally. This suggests that sentiment should be fearful enough to put in a bottom here and allow for a recovery rally back near the highs of the range.
  • Price is in a similar position as in September, when it corrected to the convergence of the 50 and 200 day EMAs and then took off.
  • Daily RSI level corrected back into its green support zone and put in a bull divergence, as it is doing now.
  • Weekly RSI corrected to the same level as in September, a solid technical reset without much price damage.
  • Monthly chart shows that the 10-month SMA in blue has been key and that level is being tested now. If price does dip back into the 55-53k zone, then this analysis would need to be re-evaluated.

Bullish Signals:

  • Price above $60,000 would confirm this analysis and suggest a resumption of the long term bull trend.

Potential Drawbacks:

  • Trendline break and a drop back into the green trend channel after breakout out to the upside.
  • Additional period of volatility and churn within the range may be needed to finish this corrective pattern, lasting about 2-6 weeks.

Overall:

This technical analysis suggests that Bitcoin is consolidating in a corrective pattern before potentially advancing to $100,000. Price above $60,000 would confirm this analysis and suggest a resumption of the long term bull trend.

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