Bitcoin breaks out...then pulls back. What's next?
Yesterday I outlined my primary count, stating bitcoin was completing it’s 5th wave before an ABC correction. Bitcoin did indeed complete its 5th wave, but it extended much higher than expected. I pointed out very strong support beginning at $9,060. I knew bitcoin was bullish, but I thought we would see a correction before testing the $9K support zone. That was not the case.
In fact, bitcoin was so bullish, it extended its 5th wave all the way of to the support zone. It was then rapidly rejected, proving that support zone is very strong.
So what can we expect next? Looking at the Fibonacci retracement, we can see wave A bounced off the 0.382 fib level. This is a bullish sign. If this count is correct, we can expect the following ABC correction before the next impulse wave up.
Once the correction completes, the next impulse wave up could play out like this:
Looking at the 4 hour RSI, we can see it has remained above the ascending support. This is bullish. If it falls below this line, we can expect a major trend reversal.
Looking at the 4 hour MACD, not much has changed. We’re still waiting on a breakout above the wedge.
Finally, as I've been saying, I want to keep you all updated on the LOG scale chart. For those that don't know, this is the chart that analyzes gains and losses as a percentage of movement rather than price. Some analysts ignore this chart while others swear by it. I believe it has merit.
Looking at the LOG scale chart, it has finally broken out of the descending triangle. This is a good sign, however, the breakout was somewhat weak. I was hoping for more momentum. We will have to wait and see if the price remains above the triangle, or if it’s just a temporary “bull trap”. In my opinion, we need to see the price remain above the descending triangle for more than 24 hours before we can call this a bull market.
BAIS
I remain neutral to bullish in the short term, but VERY bullish longterm.
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