Bitcoin remains in the same HTF analysis as previously outlined. There are two potential scenarios:
- Scenario 1: Bitcoin is currently in Wave 3 of Wave 5 within a bull market. This would mean that the price is still moving impulsively upward, with further highs expected.
- Scenario 2: Bitcoin is in Wave B of a larger corrective pattern, suggesting that the overall structure is still part of a correction. If this is the case, the current upward movement is not a new impulsive phase but rather part of a broader corrective cycle.
Low Time Frame (LTF) Analysis
When analyzing the LTF, it appears that Wave 5 is taking the form of an ending diagonal. This is characterized by three-wave movements within each sub-wave of Wave 5, which typically signifies a weakening trend. Here’s a breakdown of this structure:
- Wave 3 within this diagonal is projected to reach a higher peak, likely in the range of $92,000 to $95,000.
- Following this peak, we could see the beginning of Wave C within Wave 4 (if we are in the corrective scenario) or Wave 4 within Wave 5 (if we are still in an impulsive bull market wave).
Trading Challenges in Diagonals
Trading within an ending diagonal is notoriously challenging due to the structure’s unique properties:
- Aggressive Corrections: Waves 2 and 4 within an ending diagonal are often aggressive and can exhibit significant overlap. This makes it difficult to establish clear support and resistance levels.
- Bearish Divergences: In the short term, a higher high within Wave 3 could confirm bearish divergences on indicators such as the RSI or MACD, signaling a potential reversal.
Anticipated Movements
- Short-Term Expectation: A final push to a higher high within Wave 3, targeting the $92,000-$95,000 range. This move should create bearish divergences, reinforcing the idea of a reversal.
- Following Reversal: Once this higher high is achieved, a sharp move downward is expected, either as Wave C (if Bitcoin is in a corrective structure) or as Wave 4 within Wave 5 (if in an impulsive structure).
Regardless of the specific scenario, the next move after this anticipated high will likely be a strong, aggressive decline, as corrective patterns in ending diagonals often lead to sudden reversals.
Conclusion
In summary, while a higher high is expected in the near term, traders should approach cautiously due to the anticipated reversal. Ending diagonals are complex and present unique challenges, with high volatility likely in the coming phases.