Yesterday I told you about the critical level which have to be broken for the bullish scenario – $30800. It was not broken, the price got a rejection, but the market is showing us something interesting. Guys, please support me with your likes because today I tried very hard to remember the wave theory and draw each wave for the Bitcoin. Moreover I prepared the very interesting combination of trend and Fear&Greed analysis. Let’s go!
Elliott waves inside the Bitcoin’s wave 4
Let’s take a look at the BTCUSDT price chart of the MEXC exchange. Here is introduces the Elliott wave analysis. Yesterday I assumed that the Bitcoin is in wave 4 of the downside 1-2-3-4-5 Elliott wave cycle. You can read my previous analysis to see it. Using 4h timeframe I drilled down inside the wave 4. This wave is represented as a classical flat correction. I concluded it because there was clearly formed the wave A as a zigzag a-b-c, after that the wave B was also formed as a zigzag a-b-c. And the last one wave C in flat corrections usually represented as 1-2-3-4-5 cycle. We can clearly see the waves 1, 2 and 3. The wave 3 has the maximal value at the awesome oscillator what we can see on the chart. The subwave 4 is forming as a classical zigzag a-b-c. Now we are locally in wave c, it can be lower than wave a, as a result I anticipate wave 5 which will break $32600 as said earlier. This is the first evidence I did not close my long.
Trendlines tells us something crazy
Now let’s take a look at the BTC chart below. Here I drew all significant trendlines on the 1D chart and marked the Fear&Greed index next to these lines. At the end of January the index was 12, which is extreme fear. After that we saw the huge bounce. I want to draw your attention on the moment of breakdown at May 9. The Index was 22. It is also fear but not so extremal. Now the price formed the same trendline but with less scale. One week ago when most of traders told me that I’m crazy that forecasting the growth the Index was 12 and after that we saw pump. Now the price is above those level, but the Index equals 10. It means that almost all people now believe in dump. The bull trap was not created – this is the almost obligatory condition for the downtrend continuation.
Also take a look at the RSI. It creates divergence with the previous major swing low at $33k. It definitely increases the probability of the significant bounce. You can also use the trendlines on the RSI. The last one trendline was broken to the upside and successfully retested. While the corresponding trendline have not been broken. The RSI trendline breakout is the leading indicator and shows us the true intention of the market.