In the past few hours, Bitcoin has continued its sideways consolidation, with price action suggesting the formation of a triangle pattern, typical for Wave 4 in Elliott Wave structures. This triangle formation represents indecision in the market, but it is often a signal that Bitcoin is building pressure for its next significant move. As we see in the attached chart, this triangle pattern is becoming more evident and is usually seen in corrective waves like Wave 4.
Triangle Formation in Wave 4
As seen on the chart, Bitcoin is currently consolidating within a narrowing price range, forming a triangle pattern. This type of formation is typical during Wave 4, a corrective wave, indicating that the market is catching its breath before the next impulsive move. The Fibonacci retracement levels shown on the chart — particularly the 0.618 retracement at $61,560 and the 0.5 retracement at $60,490 — represent key support zones for Bitcoin. If the price breaks downward from the triangle, these levels are critical areas where we expect the price to find support.
Open Interest and Funding Rates: Market Sentiment
Despite the technical structure being healthy, market sentiment is a concern. Both Open Interest (OI) and funding rates have continued to rise, signaling that traders are increasingly entering leveraged positions. A rise in Open Interest combined with overly positive funding rates indicates that the market is becoming over-leveraged to the long side, often a precursor to a correction or a sharp liquidity event. This spike in market activity typically results in increased volatility, making the market more vulnerable to a pullback.
Weekly Candle Close and Volatility Expectations
With the weekly candle set to close soon, volatility is expected to increase significantly. Weekly closes often lead to large market participants making adjustments to their positions, which can result in increased price swings. A breakout from the triangle pattern, whether up or down, will likely dictate the next significant price movement for Bitcoin.
If the price breaks upwards from the triangle, it would confirm the continuation of Wave 5, pushing Bitcoin higher. On the other hand, if the price breaks downward, Bitcoin is likely to retest the Fibonacci levels mentioned above, which will serve as key support zones.
Trading Strategy
Given the over-leveraged state of the market and the rising Open Interest, we have chosen to close our long positions for now. The market appears overbought, and we anticipate a better re-entry opportunity after a potential pullback. We have placed a limit order at $62,500, a level that coincides with a significant liquidity cluster and is close to the Fibonacci support zone.
Conclusion
Bitcoin is consolidating within a triangle pattern in Wave 4, a classic corrective phase in Elliott Wave theory. While the market structure remains intact, rising Open Interest and funding rates suggest that sentiment is becoming overly bullish, which increases the risk of a near-term correction. The weekly candle close is expected to bring more volatility, and traders should prepare for increased price action in the coming hours.
The attached chart clearly illustrates the triangle formation, key Fibonacci retracement levels, and the projected Wave 5 price target. We remain cautious and look for re-entry opportunities around the $62,500 level.
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