Bitcoin Broke Above $18344, Triggering a Bull Run
Although I preferred to look lower, in early December last year, I found using the Elliott Wave Principle (EWP), “Bitcoin must break above $18185 and then above $21475 to tell us the downside has already been completed in a rather unorthodox fashion.” See here. On December 14, it traded as high as $18344, thus giving the Bears the first warning as that rally comprised five (grey) waves.
See Figure 1 below. It then pulled back in three waves and staged a rally breaking above the December 14 high. That was the trigger for my premium subscribers to go long as it would produce a rally to at least the mid-20,000s.
Ending Diagonal Invalidated – Tracking an Impulse higher
In my last update, I stated, “The price action since the August high has been overlapping, e.g., the recent stab above $18185, but no daily close above it. As such, the interpretation of it becomes more difficult, but it appears an ending diagonal (ED) 5th wave is forming. Unless the Bulls can get BTC’s price back above the December high ($18344) followed by a break above the August high at $21475.”
The Bulls did what they had to do, and now the most likely path forward is an extended impulse higher. Extended means the 3rd and 5th wave targets are beyond the typical 1.618x 1 and 2.000x 1 levels, respectively. Here we are looking at 2.618x 1 and 3.000x 1 instead, respectively. See the blue target zone boxes in Figure 1. Shorter-term, orange W-4 of grey W-iii should have bottomed, right in its ideal orange target zone, and orange W-5 to ideally $22750-24000 is underway before grey W-iv, etc., take hold.
The ultimate and ideal upside target is $27-28,000 for the current rally. At the $28K level, BTC can decide if that was all for an irregular expanded flat (black) wave-4, which would explain the three-wave decline from the August high into the November low very well. Or if it is only wave-1/a.
The former means the $10K level will get visited for all of W-5, whereas the latter suggests BTC will pull back to $20-18.5K before moving higher again for W-3/c. We will deal with that question when we get to $27-28K. For now, as long as $18344 holds, with a first warning for the Bulls below $19200, we can look for higher prices.
