Bitcoin December Update: Maintaining A Bearish Outlook

BTC/USD

In my last macro update, you can see that I was expecting a lower low after which an impulsive move to the upside. The projected decrease was expected to develop above the interrupted ascending trendline around $6914 or to the 1.618 Fibonacci level at its furthest point. 

 

October projection

This was presumed to be the Z wave out of WXYXZ correction that started on the 6th of August and is the third corrective structure since the yearly high. As this means that the Z wave’s completion marks the completion of the third correction, an impulsive move to the upside was expected as most likely we have seen the completion of the WXY correction of a higher degree. 

Looking at the current chart you can see that the price action developed in a simar fashion.

The price continued moving for a lower low to $7360 before spiking to the upside above the 0.786 Fibonacci level and reaching $10482 at its highest point. This differs from my projection in two ways. First with targets and second with momentum as I haven’t been expecting an increase to 0.5 Fib level in one go. 

That’s why after price started moving sideways I was watching the 1 Fibonacci level at around $9130 as a pivot point below which I was looking for a potential retest of the prior low. As the price continued moving below it, in an email to my subscribers on November 19th I’ve projected this scenario for the expected retest.

 

November projection

At the time I was still looking for the next starting impulse wave to the upside which is why I’ve labeled the Y wave as a potential turning point but primarily looking for a retest.

Instead, the price continued moving below the previous low, falling down to the $6914 level which was previously expected as a target for the Z wave.

This means that the starting impulse wave scenario got invalidated as the presumed 2nd wave out of the five-wave move to the upside fell below the starting point of the 1st wave, which then could only imply that we are seeing the correction from the yearly high still developing. 

In that case, the upside move we have seen pushing the price of Bitcoin from $7360 to above $10000 is the C wave from the previous ABC to the upside and is encompassed in the second correctional structure.

Looking at the 4-hour chart you can see that after further inspecting the sub-waves I believe it is true. The spike above $10000 marked the completion of the Y wave from the WXY correction to the upside. 

This differs from the previous count in a way that the waves are interpreted differently. After examining the wave degree I’ve established that what was previously labeled as the triple three WXYXZ correction to the downside actually ended on the Y wave and is in a lower degree one which makes it an ABC. 

As we have seen the price continuing to fall back inside the territory of the descending triangle in an impulsive manner this was the C wave out of the next ABC to the downside of the Minuette degree. 

After an interaction with the descending triangle’s support level at around $6700, we have seen a five-wave move to the upside forming an ascending triangle. This could be interpreted as a leading diagonal especially considering the seen impulsiveness and all the rules clearly followed: 5-3-5-3-5 structure; 4th wave doesn’t overlap with the 1st, and the 3rd wave isn’t the shortest. 

This is why I don’t believe that the price is going to continue moving impulsively to the downside from here as the ascending triangle would most likely be the A wave from the next ABC correction to the upside as the X wave from third WXY correction is to develop. 

The price is currently undergoing and ABC correction of Subminuette count as a B wave from the Minuette count and is holding above the $7170 level where its first wave A ended. Projecting the length of that wave on the presumed B wave which was an interaction with the descending triangle’s resistance, we come up with the target at the significant $6914 horizontal level. 

We are seeing a major significant level intersection around the current price point so the undecisive sideways movement expected by the Elliott Wave projection looks proper. It indicates that further retests of the significant levels would be expected before another lower leg.

If this scenario plays out, the most significant level and the most optimal price target I would be looking at is the $6266 horizontal level which also matches the 1.618 Fibonacci level and in particular at the intersection with the resistance line of the descending triangle from the yearly high. 

Taking a look back into the last year’s correctional range you can see the significance behind the levels. The first one which is at $6914 served as the first major horizontal support and next after that was at $6266. 

The one after those is at $5806 and looking back at the previous chart you can see that a point of intersection with the resistance level of the descending triangle from the yearly high is in the vicinity of the expected Y wave of the Minute count completion. So there could be a possibility of an interaction with a quick spike but optimally I would expect that the daily candle would close above it.

Is there a chance that we have seen the completion of the correction from the yearly high and that the leading diagonal was the 1st wave out of the next starting impulse to the upside? 

Looking at the chart above you can see how would that look like. In this case, the currently seeing downside movement is the 2nd wave out of the 3rd from a higher degree.

The problem is in the first wave as it looks choppy and corrective with the first spike going way above the next one and close the ending point of the entire increase and on the 2nd wave the price has retraced 100% which can happen but it usually doesn’t. 

Conclusion

Considering what’s been said I believe that the price of Bitcoin is going to continue moving sideways throughout December and start decreasing again impulsively in the second half of January after the holiday season sets in. This would be a final wave out of the complex correction from the yearly high which is why after its completion I would be expecting a bullish period to start.

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