Did A Bitcoin “Zig-Zag” Shake Out The Crypto Market?

Bitcoin price It came shockingly close to its previous peak of 2017, causing widespread panic, fear and despair in the cryptocurrency market. But could a violent move down be a zigzag correction to a text book? And if so, what does this mean for the crypto market then?

Bitcoin price action follows a deadly zig zag pattern

Despite the narrative from 2020 onwards that bitcoin and cryptocurrencies have matured, it has an asset class, and The last collapse Remind the world that digital assets remain speculative. The speculative asset is driven by pure sentiment, as there are basically no perfect ways to price bitcoin so far. Most of the signals on the series have remained bullish despite dropping more than 70% from the peak set in November of last year, for example.

Price action may be best predicted based on the Elliott Wave Theory, first discovered by Ralph Nelson Elliott in the 1930s. according to Wikipedia“The Elliott Wave Principle posits that trader collective psychology, a form of collective psychology, transitions between optimism and pessimism in repeating sequences of intensity and duration. Mood swings create patterns in market price movements at every degree of trend or time scale.”

Related reading | Bitcoin drops to 18-month lows, has the market seen the worst?

To put it more simply, the phases of the bull and bear alternate in a predictable way through what Elliott referred to as “waves.” The theory states that markets move upward between an motive phase and a corrective phase. Impulse waves are primary cycles consisting of a total of 5 sub waves. Waves 1, 3 and 5 are impulsive waves in the direction of the primary market trend, while waves 2 and 4 are corrective stages. When wave 5 completes, the driving wave (bullish market cycle) moves into a corrective wave (and bear market).

Impulse waves can come in many different forms, and corrections can be quite confusing. However, the recent correction in Bitcoin could be a writing zigzag correction, depending on how the pattern unfolds from a sentiment standpoint.


BTCUSD could have completed a zig-zag correction | Source: BTCUSD on TradingView.com

Will BTCUSD Finally Get a Relief Rally?

The zigzag pattern is a corrective 3-wave structure called ABC and is subdivided into the 535 pattern. The first move down, called A, is an impulsive 5-wave movement based on raw sentiment. Wave B has the advantage of moving upward in this case, absorbing new bullish positions which are eventually removed in wave C’s downward movement. C waves of zig-zag are also impulsive movements that are motivated by panic and fear.

when they complete, The market can go up again. It’s hard to imagine at this point in the pattern that a reversal is possible given the extreme shift in investor sentiment, but that often happens when a recovery from disbelief emerges.

Related reading | Bitcoin Weekly RSI Sets Record For Most Oversold In History, So What Comes Next?

Where Elliott Wave Theory Focuses on investor sentiment patterns that travel back and forth from bear to bull and vice versa, patterns can be used to make a profit but can only be identified after they are complete and long too late. Is the recent bearish vortex nothing more than a bearish zigzag pattern that may have just completed?

Follow TonySpilotroBTC on Twitter or join TonyTradesBTC Telegram Get exclusive daily market insights and technical analysis education. Please note: The content is educational and should not be considered investment advice.

Featured image from iStockPhoto, Charts from TradingView.com

Leave a Comment

Your email address will not be published. Required fields are marked *