Two months ago, here, we showed that Bitcoin (BTC/USD) was forming a Bull flag. Well, like it or not, the cryptocurrency is still in it and has failed to clear the last hurdle -the upper trendline of the flag; see Figure 1 below- twice now.
Thus, the two Elliott Wave Principle (EWP) counts we presented in our last update, here, are still possible. As the Bull-Bear battle rages on, we must remain patient until we get a resolution. Allow us to explain below.
Since its March all-time high, BTC/USD has bumped six times into the upper trend line, forming the potential Bull flag. Two of those were false breakouts.
We usually don’t give too much weight to trendlines as they are often subjective, but in this case, it is clearly an important hurdle the Bulls must take to rally Bitcoin’s price to ~$92-94K. That is the Bull flag’s projected upside target from the potential green W-4 low made in April.
But the Bulls may have failed again, with the crypto’s price now below its 10-day, 20-day, and 50-day Simple Moving Average (SMA) and toying with the lower edge of the Ichimoku Cloud (red and orange horizontal arrows, respectively).
Therefore, our alternative EWP count presented in our last update is becoming more likely: the “dreaded” (grey) W-X-Y, protracted correction. A standard W=Y targets ~$54K, which is close to the late April low, the 200d SMA, and the lower trendline of the Bull flag.
However, albeit a condition, not a trigger, the technical indicators (RSI5, MACD, MFI14) are getting quite oversold to levels from which important lows were formed YTD (black circles).
If the Bulls can keep the price of BTC/USD within the grey target zone of the potential W-ii, rally price back above the SMAs, and then back above the upper trendline of the Bull flag, we will have a strong signal the crypto is ready to provide us with five (grey i, ii, iii, iv, v) waves up per the green path.
Thus, although we remain bullish over the long term for BTC/USD and expect it to reach well over $100K before the run since the 2022 low is over, the Bulls still have one last hurdle to clear. They currently have lost several key support levels.
They must, therefore, show they mean even more business than last by providing a rally back above the critical SMAs and clearing the Bull flag’s upper trendline. Otherwise, we will see $54-55K before we see $92-94K.