cryptocurrency was most likely in a more significant 4th wave, taking weeks to complete. Back then, I preferred for BTC to “top around $54.7K to $ 56.1K, for a b-wave, before the next leg lower (wave-c) should target about $39.2-40.6K.”
But, I was conscious of the fact that “BTC can have one more trick up its sleeve as 4th waves of this magnitude are often more a sideways affair where recent gains are digested more in price than time, i.e., a trading range is made. This means the red b-wave/bounce can even target as high as $64.3 (ranging from $56.9 to $64.2) before that pesky C-wave takes hold … bringing the price back to $40+/-2K.”
Fast forward, and indeed BTC had a trick up its sleeve, rallying to a new all-time high of $60.7K five days ago. That was precisely the 1.618x Fibonacci-extension of (green) minor-a, measured from the minor-b low,
Not so fast just yet, as this pattern also means the recent ATH could have been a 3rd wave (red wave-iii) because 3rd waves often extend that far as well. The Bullish thesis suggests BTC is now in red wave-iv, with the last wave-v to ideally $63.4K before topping (see Figure 1B above).
What would it take for BTC to invalidate my original thesis? As long as it does not move below $52625 (the minor-a or red intermediate-i high), it can still try to reach $63.4K because 4th and 1st waves are not allowed to overlap in a common impulse. Only in a diagonal (see insert in Figure 1B) do we see such overlap. But those are erratic patterns, and I would not try to bank on them.
What do the charts favor? Currently, BTC is below its 10- and 20-day simple moving average (SMAs), while all the technical indicators are pointing down, i.e., on a sell. Not a good sign for continued upside. Besides, the MACD-indicator made a lower high at the recent ATH compared to the late-February price high. Thus the recent rally was on much less momentum and strength.
Bottom line: the chart setup on the daily time-frame is short- to intermediate-term relatively weak. Suppose BTC can now move below $52625 without making a new ATH first. In that case, my preferred “flat wave-4” scenario continues to play out as initially anticipated, with the added “flavor” of an irregular flat. Therefore, the ideal downside target can be adjusted to $43K+/-1K for a classic C=A relationship (see Figure 1A). Once the downside region is reached, I then expect the rally to $75K+ to take hold. But, if there is no overlap with $52625 over the next several days, and BTC can instead reclaim its 10d and 20d SMAs, to be followed by a rally over $60K, then the impulse pattern as shown in Figure 1B, with an ideal top at $63.4K is favored. Only then can the Bears have another shot at, with a potential downside target of $40+/-1K.