Back in March of 2020, those taking position ahead of the Bitcoin halving were blindsided by the Black Thursday market selloff, driven by panic at the beginning of the COVID pandemic and subsequent lockdowns.
With the brand-new Omicron stress making headings, and lockdowns when again thought about, could the cryptocurrency market be dealing with another unsafe macro storm and disastrous collapse?
Omicron & The Return Of The Black Swan Trend Line
According to Wikipedia, a black swan is “an event that comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight.”
Black Thursday in March 2020 categorizes completely as such. COVID came, the marketplace stressed, and Bitcoin collapsed back to $3,800 at the low. It ended up being a substantial overreaction.
Related Reading | Want To Learn Technical Analysis? Read The NewsBTC Trading Course
Despite the “surprise” element of the occasion and the reality nobody saw COVID coming, technical analysis shows that these black swan occasions can be forecasted to a point. But what if 2 black swan occasions were to occur from touching the exact same pattern line. Would these actually be thought about black swan occasions?
That’s precisely what’s at danger, provided the current Omicron stress news and associated panic, and the reality that Bitcoin cost is certainly up versus the very pattern line that was utilized to anticipate Black Thursday’s ultimate target to the dollar.
Could another black swan show up with this pattern line? | Source: BTCUSD on TradingView.com
Why Another Bitcoin Black Thursday Is Unlikely
The chart above programs that Bitcoin cost was declined from the exact same pattern line that triggered the COVID correction. The relocation was so sharp and extreme, a polar opposite rally resulted that took the cryptocurrency to more than $65,000 per coin.
Bitcoin selling simply as badly wouldn’t always be a bad thing, as the bounce from such an occasion has actually revealed. But in spite of the unsafe macro landscape and the stock exchange sinking, the conditions for the leading cryptocurrency are extremely various this time around.
The conditions were extremely various then versus now | Source: BTCUSD on TradingView.com
For one, the arrows illustrate 2 rejections from previous resistance in 2019, with the 2nd (significant in red) stopping working to break out of the Ichimoku cloud. That resistance level dated all the method back to the very start of the bearishness, which is why the Black Thursday rejection was especially strong. Meanwhile, the existing cost action more so appears to show a resistance level being turned as assistance.
The blue course describes an anticipated Elliott Wave intention wave, with 3 impulses up and 2 restorative waves. Per Elliott Wave Theory, wave 1 reveals there still life left in a property, however market individuals hesitate to think the booming market has actually started.
Related Reading | Finding Fibonacci: Is Bitcoin Beginning A “Golden” Recovery?
Because of the staying bearish belief, wave 2 eliminates the majority of the development of wave 1, prior to wave 3 starts. With lows of wave 1 retested at the climax of wave 2, market individuals are more positive in a blossoming bull pattern, which is why wave 3 tends to be the longest and greatest. EWT describes this as a wave “extension.”
Wave 4 cannot participate in the course of wave 1 and tend to move sideways. This recommends that it is not likely to see another sharp correction like what occurred on Black Thursday in 2020. Whenever wave 4 formally ends, and whether it has or not is still up for argument, targets of $100,000 per coin stay most likely for the peak of wave 5.
This is the chart I have actually been following for months now. Until that wedge breaks down, I cannot be bearish on #Bitcoin. The booming market is still on. But has wave 5 started or not? pic.twitter.com/m04xxz8Kax
— Tony “The Bull” Spilotro (@tonyspilotroBTC) December 2, 2021
Follow @TonySpilotroBTC on Twitter or sign up with the TonyTradesBTC Telegram for special everyday market insights and technical analysis education. Please note: Content is instructional and must not be thought about financial investment recommendations.
Featured image from iStockPhoto, Charts from TradingView.com