In this episode of NewsBTC’s daily technical analysis videos, we examine a possible bottoming scenario in Bitcoin price based on a potential expanded flat correction and an ending diagonal.
Check out the video:
VIDEO: Bitcoin Price Analysis (BTCUSD), October 11, 2022
The bulls and the bears have been fighting it out again. Each side is trying to control daily momentum. Cycling through indicators like the Bollinger Bands and the Ichimoku show that Bitcoin isn’t looking very great at the moment. The Parabolic SAR does not currently show any support for daily price movement.
Bitcoin could spend much more time moving sideways
LMACDs show that bulls are still in control on the three-day timeframe. Last week’s candle was closed with bullish crossovers on the same tool. This level was the lowest in bear markets past, and has seen LMACD turn green.
However, on a monthly timeline bears turn the histogram pink after opening in pink. A sign of weakening bearish momentum, pink can be an indicator. There could still be sideways for many months unless Bitcoin reverses its trend as fast in 2018
It is evident that the bear market bottoms of the past have taken 9 more months to turn pink into green, whereas it was only half the time in the 2018 bear markets. Bitcoin’s monthly momentum is not yet confirmed pink, so there could be 120-275 days until things turn around. Ouch.
Source: BTCUSD on TradingView.com| Source: BTCUSD on TradingView.com
The End of the Expanded Flat Correction is Near
It could very well be the bottom. Bitcoin seems to have completed the final leg of an extended flat correction. An ABC correction known as an expanded flat has a higher peak during the B wave than the C wave. It is characterized by a lower bottom at the C Wave.
The 3-3-5 flat pattern with 2 zig-zags, and an impulse down is the shape of expanded flats. With 5 sub-waves, the C wave is the impulse wave. The C wave is the extension of the A wave’s 1.618 Fibonacci. This is where expanded flats usually end. Take the Fibonacci Retracement Tool set for the golden rate extension and you will see that the fifth wave could have reached the exact target.
The fifth wave of an expanding flat often ends with an ending diagonal. An ending diagonal has five sub-waves itself, and looks like a falling wedge – a pattern that could be presently forming in Bitcoin if you turn on the line chart and remove wicks. Bitcoin is now at the lowest level below wave 3, and may be in the middle of an ending diagonal.
Diagrams are provided to show that the wave counts correspond well, but it is missing the final blow for bulls before bottom is in. Don’t believe in such a thing as an ending diagonal? You can see how it ended the bull markets in 2021.
Which part of the overall crypto cycle are we in?
The last part of this diagram is the location of the corrected expanded flat. The expanded flats can appear at wave 2, or 4 in a longer impulse wave cycle. This could mean that wave 5, or perhaps waves 3, 4 and 5 are still available.
Bitcoin’s 2018 bottom was in wave 1. Wave 2 of this wave took place on Black Thursday. Then, wave 3 began in 2020 into 2021, and we’ve spent all of 2022 in wave 4 so far.
Alternative scenarios would see the 2021 rally wave 1 and 5 respectively, with this correction wave 2. If the whole 2018 bear market were part of a bigger Elliott Wave triangle pattern, this would be possible. A triangle can be drawn, but it doesn’t quite fit the rules of Elliott Wave Theory.
