Bitcoin price continues to stagnate and move sideways, but according to the cryptocurrency following an Elliott Wave market cycle, a break in the boredom is due soon.
Price action follows the predicted path so perfectly, that when layering Bitcoin directly over the comparison, there is little room for doubt about what comes next for crypto. Take a look for yourself and decide.
All About Elliott Wave Theory And The Guideline of Alternation
Bitcoin is maturing with each passing bull cycle, but it remains a speculative asset. As such, narratives tend to drive the price action. When the cryptocurrency is bullish, it moves in a powerful parabolic impulse up. When things are bearish, the rollercoaster ride turns scary and many get ejected along the way.
Markets might seem like an unpredictable rollercoaster at times, but on several time scales, they can be quite predictable. In the 1930s, Ralph Nelson Elliott developed what he referred to as Wave Principle. According to Wikipedia, “Elliott stated that, while stock market prices may appear random and unpredictable, they actually follow predictable, natural laws, and can be measured and forecast using Fibonacci numbers.”
Related Reading | Now Or Never: Bitcoin Builds Base At Decade-Long Parabolic Curve
Today, the study is more commonly referred to at Elliott Wave Theory. Each “wave” has a specific type of characteristic and guidelines. Waves alternate between bullish and bearish phases. Odd numbered phases are impulse waves that move in the primary trend direction, while even numbered waves are corrective phases that move against the primary trend.
In addition to waves alternating between positive and negative growth, they also alternate in their degree of severity. And according to the Guideline of Alternation, one correction is typically sharp, while the other is flat or sideways. When this exact example is projected over Bitcoin price action the path ahead looks a lot more clear.
If Bitcoin continues to follow the path, what comes next? | Source: BTCUSD on TradingView.com
What Is Next For Bitcoin When The Flat-Style Correction Ends?
The length of each correction is also different, according to Elliott Wave Theory. Sharp corrections tend to be over with a lot faster than a flat-style correction, which painfully grinds sideways. The market itself still has a sort of post-traumatic bear market syndrome from the severity of the sharp style correction, that it is expects the market to behave in the same manner yet again.
Related Reading | Time Vs Price: Why This Bitcoin Correction Was The Most Painful Yet
However, according to the Guideline of Alternation, the probability of two of the same type of corrections is extremely low. In rare situations, two sideways corrections occur, but never two sharp corrections. This suggests that whenever Bitcoin price finally does turn around, the corrective wave four should be complete and the grand finale wave five will begin.
What happens after wave five is complete? Another bear market, and likely the worst and longest in the history of Bitcoin.
Follow @TonySpilotroBTC on Twitter or join the TonyTradesBTC Telegram for exclusive daily market insights and technical analysis education. Please note: Content is educational and should not be considered investment advice.
Featured image from iStockPhoto, Charts from TradingView.com
Bitcoin price continues to stagnate and move sideways, but according to the cryptocurrency following an Elliott Wave market cycle, a break in the boredom is due soon.
Price action follows the predicted path so perfectly, that when layering Bitcoin directly over the comparison, there is little room for doubt about what comes next for crypto. Take a look for yourself and decide.
Bitcoin is maturing with each passing bull cycle, but it remains a speculative asset. As such, narratives tend to drive the price action. When the cryptocurrency is bullish, it moves in a powerful parabolic impulse up. When things are bearish, the rollercoaster ride turns scary and many get ejected along the way.
Markets might seem like an unpredictable rollercoaster at times, but on several time scales, they can be quite predictable. In the 1930s, Ralph Nelson Elliott developed what he referred to as Wave Principle. According to Wikipedia, “Elliott stated that, while stock market prices may appear random and unpredictable, they actually follow predictable, natural laws, and can be measured and forecast using Fibonacci numbers.”
Related Reading | Now Or Never: Bitcoin Builds Base At Decade-Long Parabolic Curve
Today, the study is more commonly referred to at Elliott Wave Theory. Each “wave” has a specific type of characteristic and guidelines. Waves alternate between bullish and bearish phases. Odd numbered phases are impulse waves that move in the primary trend direction, while even numbered waves are corrective phases that move against the primary trend.
In addition to waves alternating between positive and negative growth, they also alternate in their degree of severity. And according to the Guideline of Alternation, one correction is typically sharp, while the other is flat or sideways. When this exact example is projected over Bitcoin price action the path ahead looks a lot more clear.
If Bitcoin continues to follow the path, what comes next? | Source: BTCUSD on TradingView.com
The length of each correction is also different, according to Elliott Wave Theory. Sharp corrections tend to be over with a lot faster than a flat-style correction, which painfully grinds sideways. The market itself still has a sort of post-traumatic bear market syndrome from the severity of the sharp style correction, that it is expects the market to behave in the same manner yet again.
Related Reading | Time Vs Price: Why This Bitcoin Correction Was The Most Painful Yet
However, according to the Guideline of Alternation, the probability of two of the same type of corrections is extremely low. In rare situations, two sideways corrections occur, but never two sharp corrections. This suggests that whenever Bitcoin price finally does turn around, the corrective wave four should be complete and the grand finale wave five will begin.
What happens after wave five is complete? Another bear market, and likely the worst and longest in the history of Bitcoin.
Follow @TonySpilotroBTC on Twitter or join the TonyTradesBTC Telegram for exclusive daily market insights and technical analysis education. Please note: Content is educational and should not be considered investment advice.
Featured image from iStockPhoto, Charts from TradingView.com
Tags: bitcoinbtcbtcusdbtcustcryptoElliott wave theoryxbt
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