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Bitcoin Prices $50K, But Here’s Why Bulls Aren’t Out of the Woods

The price of bitcoin reached $50,000 this morning – a feat that would have made a bear market extremely unlikely. But the bulls may celebrate very quickly, and the maximum pain scenario of a symmetrical triangle that some currently see could shake both the bears and the bulls in the days ahead.

Here’s a closer look at the symmetrical triangle, which suggests a corrective pattern, and why the bulls are definitely not out of the woods yet.

Downtrend remains unbroken, symmetrical triangle possible

Downtrends can be deceiving. They do not always mean a bear market, and even if one downtrend line is broken, another could form higher and block the reaction that bulls have been hoping for.

Related Reading | Could the Bitcoin Bull Flag Blind the Bears?

For example, a rally to $13,000 in early 2019 resulted when bitcoin broke through the bear market’s downtrend resistance. However, due to the new downtrend line formed at that high, Bitcoin spent another full year and then below some new downtrend resistance.


There is still one more downtrend resistance to go before bulls are out of the woods | Source: BTCUSD on TradingView.com

Assets must often clear three opposing trends in order for the primary trend to resume. This situation is happening now, but on a very short time scale. Bitcoin price made it through two downtrend lines, but one remained.

Drawing a symmetrical support line provides the potential for the triangle that some technical analysts are currently talking about. A valid trendline has at least three touches, but the third touch can provide the final E-wave of a triangle corrective pattern during a bull market.



The wave 4 correction could be an Elliott Wave triangle pattern | Source: BTCUSD on TradingView.com

Bitcoin price correction wave may be nearing its end

E-Wave is likely to clear any positions formed near the $40,000 support, which bulls consider a bull flag breakout if the bulls crush it. The move would also restore bearish enthusiasm, and push bitcoin price back into the $30,000 range to suck in more short positions.

Only then can bitcoin price make it through the top downtrend line to continue higher. But it all depends on where the E-Wave “ends”. It is worth noting that such a triangle often leads to new highs during bull markets.

Related Reading | Bulls Take Control Again on Bitcoin Trend Strength: What to Expect

An Elliott Wave corrective triangle will appear during wave 2 or 4 of a motive wave, which represents the primary trend. An Elliott wave corrective triangle and its high lows will keep the bull run structure in tact, and fit the Elliott Wave law of wave reversal.



If Bitcoin is in a motive wave, wave 5 should begin soon | Source: BTCUSD on TradingView.com

This rule states that only one of the two corrective waves – wave 2 or 4 – will result in a sharp correction. The second would be a sideways correction that lacks a lower level. Not only do corrective waves alternate in overall severity, patterns change. This means that if Wave 2 was an Elliott wave zig-zag, then Wave 4 would be a flat, triangle or other pattern.

Elliott Wave Theory provides a roadmap for a trend. The roadmap continues to say, until proven otherwise, that once Wave 4 ends, Wave 5 begins. But for now, the bulls are not out of the woods yet and a wave of lows may still be possible.

Follow @TonySpilotroBTC on Twitter or through TonyTradesBTC Telegram. The content is educational and should not be considered investment advice.

Featured image from iStockPhoto, Charts from TradingView.com

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