Something that I have witnessed over the years is even when it seems improbable, if the charts are suggesting it then it will most likely play out that way. A lot of investors are aping in on this move based on the “hope” they believe it provides. Yes, on the lower timeframes, the price action is quite bullish. However, it does not exclude the fact that the trend is still clearly bearish, which is further accompanied by a typical bear flag. This pump has definitely created a trading opportunity for those willing to risk it. Looking at the chart below we can see that BTC has experienced a number of pumps to the upside, only to be followed by lower lows.
Furthermore, the current price action is still printing lower highs and lower lows on the larger timeframes. You will note that I have highlighted in orange that I am expecting a further retracement. Today I went back to the bear market of 2018 and found something of particular interest. Before I get to that, I want to make mention of the fact that we are very likely seeing a 5 wave structure playing out here and that we are yet to experience the 5th wave down.
The Bear Market Of 2018
Studying the data from the bear market of 2018 revealed that a typical 5 wave structure played out and had very similar pumps to the current bear market. In the graph below I have zoomed in on the price action of 2018 and the similarities are quite striking.
There is a very strong resemblance that cannot be denied. You will also note that an initial low was printed (orange arrow) that was revisited numerous times. The price action journeyed significantly to the upside on a few occasions, only to be pushed back towards this low level of approximately $6K. In the current bear market that level is approximately $18k to $20K. In the 2018 bear market, the price action rallied almost 100% from this local bottom on one occasion. You also have to take into account that the market is currently being assisted by a very strong stock market performance. The S&P was up over 2% yesterday, which for traditional markets is pretty bullish, especially in this environment.
The Elephant In The Room
It makes the most amount of sense that Bitcoin will print a 5th wave lower, especially given the current challenges in the macro environment. I am not sure how investors have managed to block out the “challenging reality” that needs to be faced. It is also quite evident that the whales are selling into this retail pump. Why would they be selling if we were going higher? Simple, logical question. In the graph below, I have plotted how I think it could play out from here.
Whether it’s $24K, 25K, or even $28K, the charts and data are pointing to a 5th wave down, very possibly lower than the previous low. This also coincides with my prediction made months ago, prior to the LUNA fiasco. I plotted out a bottom that was likely to form in September. At that time my target was $18K with a worst-case scenario of $12K to $13K. It seems to be playing out that way but the period after the 5th wave is complete could extend longer, depending on the FED and other factors. I do however believe that a fairly conclusive bottom will be in by September to November.
People will most likely not enjoy this idea but you have to admit that a bottom at this stage of the game is a little optimistic. To be honest, after what has transpired since my initial analysis, September/November even seems optimistic. These are my thoughts and how I am interpreting what is currently playing out in the market. If you require financial advice, seek out a financial advisor. This is not financial advice.