Bitcoin (BTC) Elliott Wave Analysis: February’s Decline and Potential Reversal
Bitcoin has experienced a substantial corrective decline, dropping to a local low of $79,200. Elliott Wave analysis suggests that the downward movement may culminate in Wave 4 correction. The situation remains fragile, with critical Fibonacci levels determining potential future trends, as BTC could either initiate a bullish phase or continue the corrective decline.
Bitcoin (BTC) has undergone a notable corrective decline, breaching critical support levels and reaching a local low at approximately $79,200. Elliott Wave analysis indicates that BTC completed a Wave 4 correction, which may be poised for a reversal. However, prevailing market conditions are precarious as the Relative Strength Index (RSI) suggests oversold conditions, devoid of a confirmed bullish divergence. This decline is interpreted as part of a prolonged correction that commenced when BTC peaked near $108,000 in mid-December.
The 4-hour BTC chart reveals the ongoing corrective phase. Following the Wave X peak on January 20, at $109,211, the decline has unfolded in a detailed corrective pattern labeled W-X-Y-Z. This structure signifies a sustained corrective phase, culminating in a recent move toward the 0.5 Fibonacci retracement level at $79,522. The price action confirmed a substantial bearish breakdown when BTC fell below crucial horizontal support at $95,207, leading to an accelerated decline into oversold territory on the 4-hour RSI.
Currently, BTC has retested the 0.5 Fibonacci retracement level at $79,522, a historically significant corrective zone. A robust reaction at this level could confirm the conclusion of Wave 4, thereby positioning BTC for an impulsive wave upward. Conversely, if this level fails to hold, the price may retreat further toward the 0.618 Fibonacci retracement at $73,196.
From a structural perspective, BTC’s corrective sequence mirrors a classic expanded flat or double zigzag, both of which usually precede bullish impulses. Confirmation of a reversal necessitates reclaiming at least $85,848 (0.382 Fibonacci retracement) and, ultimately, breaking above $93,676 to establish a bullish trend once more.
In addition, the 1-hour BTC chart illustrates potential short-term price movements and identifies areas for a possible reversal. Current wave counts imply that BTC may have completed its Wave Z around the $79,000 low. Should this signify the end of the correction, a five-wave impulse could form in upcoming sessions, indicating bullish momentum. A preliminary rally may propel BTC toward the 0.382 Fibonacci retracement at $85,848, the initial resistance level to surpass.
A sustained advance above this threshold would pave the way for a retest of the 0.236 Fibonacci level at $93,676. A successful breach of this zone would signal a complete trend reversal, potentially enabling BTC to reclaim the $100,000 psychological mark. However, if BTC fails to establish a higher low above $79,000, it remains susceptible to further declines, potentially targeting $73,196 (0.618 retracement). A definitive drop below this level would undermine the bullish wave count, signaling a prolonged corrective phase.
The RSI on the 1-hour chart indicates emerging signs of bullish divergence, suggesting a potential local bottom. With growing momentum, BTC may begin an impulsive Wave 5 that targets new highs, consistent with Fibonacci extension levels projected at $102,245 and $109,211.
In conclusion, Bitcoin’s price has significantly declined, reaching a critical local low that raises questions about its future trajectory. Elliott Wave analysis indicates that we may be near the end of a long-lasting correction, yet key resistance levels must be reclaimed for a bullish reversal to materialize. The success of BTC in overcoming these hurdles will determine its potential to target new highs or face further declines.
Original Source: www.fxempire.com
Post Comment