Bitcoin price is making another attempt to take back and hold $ 50,000 at the time of this writing. When the Ichimoku indicator is activated, the leading cryptocurrency by market capitalization also tries to stay above the cloud.
The loss of the cloud under similar circumstances last time resulted in one of the worst sell-offs of all time on Black Thursday in March 2020. Could such a mess be included in the forecast for crypto?
Holding over the cloud could prevent Black Thursday from repeating
By the time Bitcoin either hits a lower low or climbs well above $ 50,000 and hits its current all-time high, the debate will rage over whether the bull market will continue or whether a bear phase has begun.
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A battle between bulls and bears is breaking out right now, and although at first glance it looks like $ 50,000 is the price, price action is trying to find its way over the Ichimoku Cloud – also known as Kumo – in the three-day timeframe. to keep.
The loss of the cloud to Bitcoin could lead to a deeper correction | Source: BTCUSD on TradingView.com
In trying to use the cloud from the past to predict the future, losing the cloud on time could lead to a collapse similar to Black Thursday. A red cloud represents bearish strength in the market. Even though Bitcoin is rising, bears could still have the upper hand.
A theory about where the bitcoin correction will end
When such a case occurs, the lower low does not necessarily mean that a downtrend has started. The very definition of a downtrend is a series of lower lows and lower highs that will happen in Bitcoin if the top cryptocurrency reverses here.
Even Black Thursday itself was a buy-signal and marked the completion of an ABC correction. According to the Elliott wave theory, every impulse wave is followed by a correction wave.
Another ABC correction would move to a lower low | . lead source: BTCUSD on TradingView.com
With an ABC correction, the C wave is always lower than the A wave. To add more credibility to the idea, both rallies saw a similar breakdown on the way up.
There is no guarantee that a C-wave will arrive. Also, impulse waves are moving in the main direction of the trend and the current corrective wave could be a wave four in a larger formation, making any downward movement relatively debatable.
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The larger pattern indicates a final wave five up before the bull market is over, and the fifth wave will be remembered. If the formation is valid, Bitcoin could see its worst bear market ever.
Similar thoughts on #bitcoin – potential final diagonal. pic.twitter.com/HYyBIEGyxN
– Tony “The Bull” Spilotro (@tonyspilotroBTC) August 7, 2021
Follow @TonySpilotroBTC on Twitter or via the TonyTradesBTC Telegram. The content is educational and should not be viewed as investment advice.
Featured image from iStockPhoto, charts from TradingView.com