The 05/30/21 blog “The Quiet Before the Storm” illustrated two Elliott wave counts for Bitcoin in US dollars (BTCUSD). It now appears the alternate wave count is forming and the BTCUSD 05/19/21 bottom was Minor wave “3”. The subsequent Minor wave “4” correction looks like a developing an Elliott wave – Horizontal Triangle.
The daily BTCUSD chart courtesy of Trading View illustrates the wave count from the mid -April all-time high.
Within Elliott motive patterns, corrective waves “two” and “four” usually have Fibonacci time and price relationships. As of 06/02/21 the supposed Horizontal Triangle was equal in time to the supposed Minor wave “2”. The widest part of the forming triangle is 12478 points, nearly equal to the 12553 points of the supposed Minor wave “2”.
After completion of a Horizontal Triangle there’s usually a trust in the direction of the primary trend – in this case down. The most likely target zone for completion of the post triangle thrust down is near the area of a Fibonacci .618 retrace of the bull market from March 2020 to April 2021.
The 30-minute BTCUSD charts zooms in on the forming Horizontal Triangle.
To see a textbook version of this type of Horizontal Triangle, examine “Elliott Wave Principle” Frost and Prechter-1998 edition – page 49 – figure 1-42. The illustration for a Contracting Horizontal Triangle within a bear market is almost identical to the BTCUSD action after the 05/19/21 bottom.
If a post triangle thrust down develops it could happen as soon as 06/03/21. If a BTCUSD trust down occurs it could also have a bearish effect on the US stock market.