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In this episode of NewsBTC’s daily technical analysis videoswe are investigating a possible bottom scenario in Bitcoin price based on a possible extended flat correction and an end diagonal.
Watch the video below:
VIDEO: Bitcoin Price Analysis (BTCUSD): October 11, 2022
Bears and bulls battle it out again, each side trying to take control of the daily momentum. Cycling past indicators like the Bollinger Bands and the Ichimoku show that Bitcoin isn’t looking that great right now. Only the Parabolic SAR is currently showing any type of indicator support below the daily price action.
Why Bitcoin Could Spend Much More Time Moving Sideways?
The LMACD shows that bulls still prevail on the 3-day timeframe, and the last weekly candle closed with a confirmed bullish crossover on the same tool. The LMACD turning green from this level has bottomed out during previous bear markets.
But on monthly time frames, bears have colored the histogram red after opening pink. Pink is a sign that bearish momentum is weakening. Unless Bitcoin realizes an extremely rapid turnaround like 2018, there could be many more months sideways ahead.
If we compare previous bear market bottoms, we can see that it took another 9 months after it turned pink to turn green during the 2015 bear market while it took only half that time during the 2018 bear market. Now the monthly momentum of Bitcoin hasn’t even been confirmed pink yet, the top cryptocurrency could have anywhere from 120 to 275 days before things start to change. ouch.
Linear scale breakout leaves room leftover in log scale | Source: BTCUSD on TradingView.com
The end of the extended flat correction is approaching
In terms of a bottom it could be close. Bitcoin seems to complete the last leg of a year extended flat correction. An expanded flat is an ABC correction with a higher high on the B wave and a lower low on the C wave.
Expanded flats form a 3-3-5 pattern, with two zigzags and a downward impulse wave. The C wave serves as the impulse wave with 5 sub waves. Expanded flats typically end in the C wave at the 1,618 Fibonacci extension of the A wave. If you use the Fibonacci retracement tool for the extension of the golden ratio, the final wave five can end up on the exact target.
Expanded flats usually end with an end diagonal in the fifth wave of the structure. An end diagonal itself has five subwaves and looks like a falling wedge — a pattern that could be forming in Bitcoin right now if you turn on the line chart and remove fuses. With the fuses removed, Bitcoin has hit a new low below the wave 3 low and may be in the middle of an end diagonal before reversing.
The included diagrams show how the wave counts match enough, but misses the final blow to bulls before the bottom is finally there. Don’t believe in something like an end diagonal? Watch how the same ended the bull market in 2021.
Where are we in the overall crypto cycle?
Finally, the last piece of the chart we’re comparing is the placement of the expanded planar correction. Expanded flats appear either at wave 2 or wave 4 during a larger impulse wave cycle. This means that wave 5 is still left, or possibly wave 3, 4 and 5 remain.
In one scenario, Bitcoin bottomed out in 2018 and the 2019 peak was wave 1, followed by wave 2 on Black Thursday. Then wave 3 started in 2020 to 2021 and we have spent all of 2022 in wave 4 until now.
The alternate scenario makes the 2021 rally wave 1 of 5, and this current correction wave 2. The only way this is possible is if the entire 2018 bear market was part of a larger Elliott Wave triangle pattern. A triangle can be drawn, but it doesn’t quite follow the rules of Elliott Wave Theory.