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BTC Trading: Elliott Wave Theory

The Elliott Wave Theory is a theory of financial market movements that was first described by the American engineer and stockbroker, Ralph Nelson Elliott. It is based on the idea that over time there are repetitive cycles of boom and bust in the overall stock market.

The elliott wave bitcoin 2021 is a theory that states that the price of Bitcoin will rise and fall in waves.

Elliott Wave theory is a kind of technical analysis in which Bitcoin traders search for recurring long-term price patterns in Bitcoin (BTC). According to the Elliott wave theory, a crypto asset’s price fluctuations, such as Bitcoin (BTC), can be anticipated because they move in repeated up-and-down patterns called waves, which are caused by investor psychology.

Note that Elliott wave or pattern analysis does not guarantee future Bitcoin (BTC) price movement, but rather assists in determining the possibilities of future market activity.

The idea distinguishes between two kinds of waves: impulse and corrective waves.

Wave of impulse:

Five sub-waves make up an impulse wave, which causes net Bitcoin (BTC) movement in the same direction. Its formation, on the other hand, is defined by three rules. These are unbreakable rules. If one of these criteria is broken, then the structure isn’t an impulse wave. The three rules are as follows:

  • Wave two can’t retrace more than 100% of wave one’s path.
  • Wave three can never be the shortest of the first, third, or fifth waves.

Waves of correction:

The Corrective wave in the Elliott wave model is made up of three, or a mixture of three, sub-waves that cause net Bitcoin (BTC) movement in the opposite direction of the trend. Each sub-wave of the diagonal, like an impulse wave, never completely retraces the preceding sub-wave, thus sub-wave three of the diagonal may not be the shortest.

Simply stated, change in the trend’s direction occurs in five waves known as Impulse waves. While every trend reversal occurs in three waves, known as the corrective wave.

BTC Elliott Wave theory cycles: CryproPurview Bitcoin technical analysisImage 1: The trend’s movement is designated 1, 2, 3, 4, and 5. Image 2: The trend’s movement is labeled 1, 2, 3, 4, and 5. The three-wave correction is denoted by the letters a, b, and c.

On all time scales of the trend, the Elliott wave model indicates that an asset like Bitcoin (BTC) market price may alternate between an impulse and a corrective phase. To generate bigger patterns, these impulse and corrective waves are layered in a self-similar fractal. Smaller patterns may be found inside larger patterns, in other words.

These patterns may be seen on both long and short term charts. A one-year chart, for example, might be in the middle of a corrective wave, while a 30-day chart could be showing a building impulsive wave. As a result, a trader may have a long-term negative view while also having a short-term optimistic outlook.

BTC Elliott Wave theory cycles: Bitcoin technical analysis, predictions/ forecastImage 2: To generate bigger patterns, these impulse and corrective waves are layered in a self-similar fractal.

Waves 1, 3, and 5 are split into 5 lesser degree impulses labeled I ii, iii, iv, and v in the picture above. Corrective waves 2 and 4 are split into three smaller degree waves designated as a, b, and c. A greater degree Impulse wave is made up of five waves that travel in waves 1, 2, 3, 4, and 5. (I).

Corrective waves are subdivided into three smaller-degree waves, which are indicated by the letters ABC. Wave A of a corrective wave is a five-wave counter-trend impulse, followed by a retrace (wave B) and another impulse (wave C). A greater degree corrective wave is made up of the three waves A, B, and C. (II).

Elliott Wave Theory is a theory that was created by Ralph Nelson Elliott. The theory has been used to predict the movement of financial assets such as stocks, bonds, and commodities. Reference: elliott wave trading.

Frequently Asked Questions

Does Elliott Wave theory work on Cryptocurrency?

Elliott Wave theory is not a scientific theory. It is more of an analytical tool that investors use to forecast the price movements of stocks and other assets.

What Elliott Wave is Bitcoin in?

Bitcoin is currently in a corrective Elliott Wave pattern.

Is Elliot Wave Theory legit?

Elliot Wave Theory is a legitimate theory.

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