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Bitcoin Price 10% Bounce Reclaims 70-Day Support – Similar Movement Led to 90% BTC Increase in February

Last Updated May 16, 2024 10:35 AM
Valdrin Tahiri
Last Updated May 16, 2024 10:35 AM
By Valdrin Tahiri
Verified by Peter Henn

Key Takeaways

  • The Bitcoin price started an upward movement on May 1 and reclaimed key support levels.
  • A very similar upward movement eventually led to a 90% Bitcoin price increase in January.
  • Will Bitcoin increase in a similar fashion this time, or is the bounce simply a relief rally?

Fractals are repetitive movements that often lead to similar outcomes. More commonly, they happen during failed breakout or breakdowns, but are also visible in legitimate movements. Indicator readings sometimes match in these instances, though it’s not obligatory.

With Bitcoin’s price increase sharing similarities to the January movement that led to the all-time high, it leads to the question of a similar movement can transpire this time around, finally ending the two-month long correction.

Bitcoin Fractal Increase Goes According to Plan

The Bitcoin price has increased since May 1, when it had juts fallen below the support trend line of a descending parallel channel. The ensuing bounced reclaimed both the channel’s support trend line and the $60,800 support area.

After hovering above the area for a week, BTC started another upward movement on May 15 and moved above the channel’s midline. The channel’s resistance trend line is at $70,000.

Bitcoin Price Channel Increase
BTC/USDT Daily Chart | Credit: TradingView

The daily RSI and MACD support the increase toward the channel’s resistance trend line and possibility of a breakout. The RSI moved above 50 and the MACD increased above 0 (green icons). While the RSI has increased above 50 several other times during the past month, the MACD has not done so since the rejection on April 12.

So, it is the first time since then that both indicators have given a bullish signal.

What About the Wave Count?

There are two valid wave counts still in place. While both indicate the price will reach the channel’s resistance trend line, only one predicts a breakout. The bullish wave count implies BTC has started the fifth and final wave of its upward movement. A target for this increase is at $84,200. The sub-wave count is in black, showing a completed W-X-Y correction.

The bearish wave count suggests BTC is still in wave X (yellow) of this increase. If this count is accurate, the channel’s trend line will reject the BTC price and trigger a decline toward the support trend line, completing wave Y. If this is the correct count, the bottom of sub-wave Y would not mark the absolute bottom. While this does not violate Elliott Wave rules, it is uncommon.

Wave Count
BTC/USD 12-Hour Chart | Credit: TradingView

As a result, it is likely that the BTC price will reach the channel’s resistance trend line. However, it is still unclear if it will break out or get rejected. Because of the similarity to the January movement and the irreguralities of the bearish wave count, a breakout is more likely.

Failed Breakdown Leads to Reclaim

The BTC price has declined inside a descending parallel channel since its all-time high of $73,777 on March 14. These channels usually have corrective movements inside them.

On May 1, BTC fell to a low of $56,552. On top of being the lowest price in over 60 days, the decrease marked a breakdown from the channel. However, the breakdown turned out to be illegitimate. BTC bounced the next day (green circle) and has increased by 10% since.

On top of reclaiming the channel, the Bitcoin price also increased above the $60,800 support area, which has existed for 72 days.

Bitcoin Price Reclaims Bottom
BTC/USDT Daily Chart | Credit: TradingView

So, the failed breakdown caused a notable reaction to the upside, a sign that bulls have taken over. The only bearish undertone is the rejection from the channel’s midline (red icons), which created two bearish candlesticks with long upper wicks.

The daily RSI and MACD both give bullish readings. The RSI broke out form its bearish divergence trend line, which prepared the way for the entire downward movement. Finally, the MACD’s momentum has also generated a bullish divergence (green).

Based on the price action and indicator readings, it appears the BTC price bottom has been reached. While a retest of the $60,800 area is possible, the outlook suggests the Bitcoin price will increase, eventually break out from the channel and reach a new all-time high.

Similar Bitcoin Movement led to 90% Price Increase

A very similar reclaim happened on January 26. At the time, the BTC  price had broken down from the $40,700 horizontal support area (green circle) before reclaiming it. This led to a 90% Bitcoin increase that concluded with the all-time high price of $73,777.

Bitcoin Movement in January
BTC/USDT Daily Chart | Credit: TradingView

The daily RSI and MACD broke out from their bearish divergence trend lines shortly after the reclaim, similarly to what has happened in the current movement. The main difference between the two movements is that BTC has traded inside a descending parallel channel in March while it did not do so in January.

BTC Price Prediction: Wave Count Forecasts New All-Time Highs

The daily time frame wave count matches precisely with the price movement, indicator readings and fractal from January. There are multiple reasons for this.

Firstly, the BTC price is likely in the third wave (white) of a five-wave upward movement. The sub-wave count is in black, and the proposed end of sub-wave four is at a level extremely suitable for the bottom.

The low (green circle) was made right at the middle of a parallel channel connecting sub-waves one and two. This is common in wave four and is known as a fourth wave pullback. It also coincided with the 0.5 Fibonacci retracement support level.

BTC Price Long-Term Wave Count
BTC/USD Daily Chart | Credit: TradingView

Secondly, the movement in January marked the bottom of wave two (yellow). This also explains the lack of channel structure, since waves two and four are supposed to have alternation in their price movement.

If the BTC price has started the final sub-wave, the most likely endpoint is between $84,200 and $90,600. The target is created by the 1.61 external Fibonacci retracement of sub-wave four (yellow) and by giving wave three 2.61 times the length of wave one (white).

Is the Correction Over?

While the long-term wave count suggests the price will reach a new all-time high, there are two scenarios for the short-term one, and only one of them suggests the correction is over. The count with the highest probability suggests that the correction has ended.

The interior structure of sub-wave four is a W-X-Y correction (yellow), where waves W and Y had a 1:1 ratio. On top of this, sub-wave four had exactly the same length as sub-wave three, advocating for a completed correction.

Short-Term Structure
BTC/USD Six-Hour Chart | Credit: TradingView

The alternate possibility is that BTC is still in this W-X-Y correction, currently completing wave X. The structure of this scenario is unusual due to the breakdown below the wave X bottom.

If this is the correct count, BTC will continue consolidating inside the triangle, making the correction considerably longer than the upward movement leading up to it. Even in this option, the price will not necessarily break down below the May 1 low of $56,500, since the actual W wave low is at $59,629.

Alternate Correction
BTC/USD Six-Hour Chart | Credit: TradingView

These characteristics make the second count less likely. Rather, the prospect of a completed correction is the primary one.

New All-Time High in the Summer

The BTC price bounce since May 1 is a decisive sign the correction is over. This lines up well with the positive indicator readings, wave count and a very similar movement that transpired in January.

So, the Bitcoin trend is considered bullish as long as the price does not close below the $60,800 horizontal support area. A breakout from the long-term channel will confirm this outlook and possibly lead to a new all-time high.

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