Bitcoin Makes New Historical Highs – This week the price of Bitcoin continued up from last week’s $1122 to a new all time high (ATH) price across all exchanges. European exchange Bitstamp, clocked in at $1222, $55 above the $1163 high from December 2013. Soon after, price dipped back below the all time high on the 2H – 6H time frame. But, this has done little to quell optimistic hopes of a continued rally to $1400. With an ETF decision on the line, after months of delay, speculation is rife in Bitcoin forums. Bitcoin looks set to have a go at the new $1220 all time high!
At publishing last week’s analysis, price was hovering below $1127, after $1140 resistance pushed back. A shallow dip to $1127 followed, forming a firm base for a brief correction. The trend picked up again from this bottom, pushing past $1140, and rising sharply to break the December 2013 high, to a record $1220 historical high. Price was unable to hold above the ATH and fell to $1095 within a short span of 12 hours. Hardly surprising.
Using Elliott Wave predictive five wave pattern, I had been anticipating a corrective wave (iv) on the short term charts – 2H, 4H and 6H. Here, a 5 wave structure was clearly forming as seen above. EW guidelines state wave (iv) should not retrace beyond wave (i) at $1020. Any decline below (i) was out of the question.
Price behaved as expected, first declining sharply to a low $1096, before retracing back a long candle wick to $1075. The trend has coiled up into a consolidation pattern forming higher and higher lows. A solid double dip bottom preempted an advance to above $1200 only briefly. The inevitable wave (v) is underway. As at writing this, bitcoin sits above $1197.
On the 3 day chart, price is clawing back up from a shallow $754 retracement. On this longer term charts, just like on the 12 hour chart, a wave 5 fractal is under way after a 4th wave correction. Estimates for a wave 5 top vary depending of the reversal pattern that forms. Wave 5s are terminal and mark an end to the trend.
In the coming days, one of several structures will form
One alternative is a truncated 5th wave as seen above. In this pattern, the top roughly equals or the top of the 3rd wave. After this top, a correction of the whole wave structure kicks in.
A second alternative is a head and shoulder top. The first left shoulder would be the wave 3 top, a 5th wave break out higher than 3 would form a head, followed by a retrace to the neckline (a), to form a lower high (b) as a second right shoulder.
A third alternative that is an impulsive ending diagonal triangle pattern that frequently appears in the wave 5 position.
These are only examples to stimulate thought on what to look out for in a top. In all these possible formations, price makes a new high, even marginally, but only as a terminal peak. The bull trend from 2015 is nearing its end, telling from shortening consolidation times and a hastening trend. No correction for the whole magnitude of the wave marked J has occurred.
I am not the only one who is concerned.
Vinny Lingham, an expert trader who has been right on every single call, wrote in “Preventing another Bubble”
“Today, I need to provide a warning about the risks of the price appreciating too quickly. If March 11th comes and the ETF is declined, I doubt we will see any more than a $150 decline in the price. If that happens, this will be a strong buying opportunity, for sure.”
The Winklevoss COIN ETF decision on March 11 continues to weigh over the market. Probabilities of an approval range from 10 -15% by Vinny Lingham and below 25% by Block Capital’s Spencer Borgart. Vinny projects a price fall of $150 to $200, while Needham’s Report forecasted a fall of 10%; a target of $1000 in both if the ETF fails approval.
I do not expect the ETF will be approved, and expect a decline immediately after or days before. I expect a decline to the $700 – $800 zone after, which is the 38.1% fibonacci retracement level of peak $196 low in August 2015 and (if) we get a $1400 top.
Bitcoin Weekly Price Forecast
This week i expect price to have another go at the new $1220 high and possibly break up to $1400. As we approach the ETF deadline, new highs are a high probability, but with caution. Whatever top we get in the coming weeks will be terminal.
Expert trader Peter Brandt has tweeted he expects a reversal too, and compared the current Bitcoin highs as reminiscent of the chart above; Silver XAGUSD high from 2011 .
“the end is at hand or near. BTCUSD smells a lot like Silver did in 2011. If the blow off in Bitcoins is not THE end, then it’s the beginning of the end.”
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