Is Bitcoin Finally Breaking Out?
The Big Brother of all cryptocurrencies, Bitcoin, rallied in 10 days from its March 10 low at $19597 to over $28K. However, it has been stuck in a trading range between essentially $27.5-28.5K. See Figure 1 below.
As I Tweeted today, corrections can go in two ways: price or time. The March low was in price as it corrected almost 62% of the November 2022-February 2023 rally, whereas the recent stalemate appears to be in time
BTC/USD Daily Chart
The above chart shows how BTC’s price relates to several, key, simple daily moving averages (d SMA) and Ichimoku Cloud (IC). As we can see, it is above the rising (pink) 10d SMA, which is above its rising (green) 20d SMA, etc. We can notate that as “” That is a 100% Bullish chart. Moreover, BTC’s price is also above its green IC, adding weight to the evidence of a Bullish trend and that the last 24-25 trading days were nothing more than a time correction. Besides, BTC is trying to break out above the critical $28,900 level. What does a breakout mean?
According to the Elliott Wave Principle (EWP) count, our preferred weapon of choice in assessing where price goes most likely next, BTC is -what is called in EWP terms- a nested set of 1st and 2nd waves. See Figure 2 below. A breakout above the March 22 high at $28877 kicks in the green W-3, 4, 5, etc. sequence. However, a break below the late-March low of $27270 opens up a deeper retrace before BTC can move higher. For now, that Bearish scenario is not our preferred scenario as a breakout appears underway, but it serves as our insurance policy to avoid havoc to our portfolio.
BTC/USD Daily Chart
Thus, today’s break out favors the Bulls, and if it holds, we should now be in grey W-iii of green W-3 of red W-iii of black W-3/c. That is a mouth full, but it means BTC is in a bullish EWP sequence and can, assuming standard Fibonacci-based extensions and retraces for each wave, reach $38K+/-1K before a more significant correction ensues, or the Bear market from 2022 may even resume.