The cryptocurrency market, specifically Bitcoin, has recently captured global attention with significant price movements. As seen in the accompanying video, Bitcoin recently achieved a new all-time high, propelling excitement across the trading community.
Despite this bullish sentiment, the analysis suggests a cautious approach, with some traders preparing to take substantial profits from their long positions. Let’s delve deeper into the technical indicators and strategies guiding these decisions, offering a clearer picture for anyone looking to understand Bitcoin’s potential next moves.
Navigating Bitcoin’s New All-Time Highs and Price Targets
Bitcoin’s journey has been nothing short of remarkable, breaching previous resistance levels to establish fresh all-time highs. The video highlights a daily resistance level at approximately $123,300 USD that was broken, leading to another surge towards the $124,500 USD area.
This upward momentum has naturally made long trades on Bitcoin and various altcoins highly profitable. However, the question on many traders’ minds is whether a significant pullback is imminent or if higher targets are still within reach for the leading cryptocurrency.
Understanding Elliot Wave Theory for Bitcoin Movements
Central to many Bitcoin price predictions is the Elliot Wave Theory, a method of technical analysis used to forecast market trends. This theory proposes that collective investor psychology moves between optimism and pessimism in natural sequences, reflected in wave patterns.
The video identifies a bullish Elliot Wave count, suggesting Bitcoin has completed its first impulse wave, undergone a correction, and now potentially finished the third impulse wave. Traditionally, the third wave is the strongest and most extended wave in a five-wave sequence.
Fibonacci Extension Levels: Identifying Future Resistance
To pinpoint potential future price targets for Bitcoin, traders often utilize Fibonacci extension levels. These are derived from the mathematical relationship found in the Fibonacci sequence and are applied to charts to project how far a price movement might extend.
The 1.618 Fibonacci extension level, a crucial Golden Ratio, was nearly hit with remarkable precision, suggesting its significance. Furthermore, if Bitcoin maintains its impulsive move higher, the next target for the third Elliot Wave is projected to be around $130,000 USD, aligned with the 2.0 Fibonacci extension level.
Fibonacci Retracement: Pinpointing Potential Pullbacks and Support
While extension levels predict where a price might go, Fibonacci retracement levels help identify where a price might pull back to before continuing its trend. These levels act as potential support areas during corrections.
Should Bitcoin experience a downward correction, marking the start of a fourth Elliot Wave, key retracement levels to watch include 0.236, 0.382, and 0.5. The 0.5 level, however, is often considered less ideal for a fourth wave, as it can overlap with the territory of the first wave, potentially invalidating the Elliot Wave count.
Ideally, a healthy fourth wave correction would find support at the 0.382 or 0.236 Fibonacci retracement levels. Traders often look for opportunities to enter new long positions around these areas, anticipating another push towards a new all-time high.
Monitoring Crucial Reversal Signals: Rising Wedge and Bearish Divergences
Despite the current bullish momentum, experienced traders remain vigilant for signs of an impending market reversal. Two critical indicators discussed in the video are the rising wedge pattern and bearish divergences on key oscillators.
The Rising Wedge Pattern: A Potential Bearish Indicator
A rising wedge pattern is a technical chart pattern characterized by two converging trend lines both sloping upwards. This pattern often signals an exhaustion of buying pressure and can precede a bearish reversal.
The video highlights a significant rising wedge pattern in Bitcoin’s current trading, suggesting that the cryptocurrency might be forming its fifth and final push upwards within this structure. Confirmation of this pattern could indicate a major cycle top for Bitcoin.
Bearish Divergences on RSI and MACD: Warning Signs on Higher Timeframes
Bearish divergences occur when the price of an asset makes higher highs, but a technical indicator, such as the Relative Strength Index (RSI) or Moving Average Convergence Divergence (MACD), makes lower highs. This discrepancy suggests weakening momentum despite price appreciation and often precedes a price reversal.
Currently, on the daily timeframe, no clear bearish divergences are visible on the RSI or MACD. However, zooming out to two-day or three-day timeframes reveals potential lower highs on both indicators, hinting at developing bearish divergences. If these are confirmed, it could be a strong signal for traders to take significant profits or even consider short positions across the crypto market.
Conversely, if these potential divergences are invalidated by the RSI and MACD continuing to make higher highs in line with Bitcoin’s price, it would suggest a more bullish scenario and a potential invalidation of the rising wedge pattern.
The Significance of RSI Overbought Conditions and Monthly Performance
Beyond divergence, the RSI alone can provide insights into market sentiment. When the RSI enters the “overbought” area (typically above 70), it indicates that an asset may be overextended and due for a pullback or consolidation.
Historical examples show that Bitcoin often experiences a push to the downside or a period of consolidation after reaching overbought RSI conditions. This aligns with the potential start of a fourth Elliot Wave correction before another upward push.
On a broader timeframe, October has historically been a strong month for Bitcoin. The video notes that Bitcoin was already up 10% in October, reinforcing its bullish reputation. However, the completion of a five-wave price structure, even within a historically bullish month, would still warrant caution, prompting strategic profit-taking.
Advanced Insights: CBD Indicator and CME Futures
For an even deeper understanding of market dynamics, traders look at indicators like Cumulative Volume Delta (CBD) and CME Futures data.
CBD Indicator: Gauging Market Absorption
The CBD indicator, which tracks the net difference between buying and selling volume, can reveal underlying market strength or weakness. The video points out that despite some traders entering new short positions, these shorts are currently being absorbed by buying pressure, creating a higher low on Bitcoin while CBD shows a lower low.
This “bullish absorption” on lower timeframes (e.g., 30-minute) suggests an underlying strength that could momentarily propel Bitcoin towards specific Fibonacci targets. However, caution is advised against “longing the all-time high” directly, as such positions carry higher risk.
CME Futures Gaps: Short-Term Price Magnets
The CME Futures market, which trades Bitcoin futures contracts, often creates “gaps” between its closing price on Friday and opening price on Sunday evening. These gaps frequently act as price magnets, meaning Bitcoin’s spot price tends to move to fill them.
A CME Futures close at approximately $123,600 USD on Friday, with Bitcoin trading slightly below this level, indicates a high probability (around 90%) of a short-term push back towards that price point. This movement could align with the aim of hitting the 1.618 Fibonacci extension level with precision before a more significant fourth wave correction begins.
Strategic Profit-Taking and Altcoin Opportunities
The core message emphasizes strategic profit-taking once Bitcoin completes its anticipated five-wave structure. The speaker recounts entering a long position at $109,500 USD by “buying low,” a fundamental trading principle.
Now, with Bitcoin pushing higher and retail excitement building, the strategy shifts to “selling high” and taking profits. This approach isn’t limited to Bitcoin alone; it extends to the broader crypto market, including altcoins like Ethereum, which are often correlated with Bitcoin’s movements.
Even if Bitcoin experiences a downward push to begin its fourth wave, this presents an opportunity to “buy the dip” on both Bitcoin and Ethereum at identified support areas. The expectation is still for another push upwards to complete the five-wave structure for these assets, potentially leading to new all-time highs for Ethereum as well, before a larger market cycle top.
