Bitcoin’s (BTC) direction is currently vague, with the crypto taking a breather after another week of exceptional and erratic price pumps – and after setting in new year-to-date highs.
A rather surprising and dramatic break up on May 3, quashing for now fears surrounding Bitfinex and Tether, was followed next day (May 4) by a violent dump down to $5,500. But this movement was quickly bought up, and a slight uptrend has resumed.
Many analysts are waiting for Bitcoin to top out its impressive run-up and correct. Although the leading crypto has so far refused to make a significant correction down, we are now closing in on the definitive knot of resistance of all of 2018: around $6,000.
This correction may come at any time, so we might as well prepare for it. The problem with this activity is that there is not much clear price history to latch on to in the recent past, namely during the late 2018 capitulation from $6,000 to almost $3,000 – it is a bit of a “no man’s land.”
We may use a Fibonacci retracement overlay (displayed) to try and predict a possible retracement level. But this seems vague without confluent and strong price history, and thus we might only require that a retracement stays above the critical $4,200 breakout point from April; and ideally above the 200 day moving average, currently sitting at $4,400
Most chartists of Elliot Wave theory (technical analysis can be rather tribal with respect to methodology!) definitely see a correction as necessary, within an obvious and massive impulse wave up (see pattern below).
Putting aside grand movements, we can at least discern the market structure of the current medium term price action, by now forming a yet larger uptrend channel and exhibiting several reference points to grab ahold of. Based on this structure, we might expect a shorter term correction (within a week) to be bought up at about $5,300.
And regarding the above chart, ignore the doom wick to the downside – as I already discussed in an article, this (seeming) anomaly occurred only on Kraken.
(The views and opinions expressed here do not reflect that of CryptoGlobe.com and do not constitute financial advice. Always do your own research.)
