A crypto strategist who correctly labeled Bitcoin (BTC) ‘s 2018 bear market bottom says the king of cryptocurrencies is likely to recover. It’s turning on a different leg toward its sub-$16,000 target. The four-hour [chart] shows five [waves] down from this false range high, which I consider a confirmed trend reversal—waiting for a major drop to the bottom of the range after we get a counter-trend bounce for the next few days.
Smart Contractor is a popular practitioner of Elliott Wave Theory. This technical analysis approach attempts to predict future price movements by following crowd psychology, which tends to manifest in waves. According to the theory, a bearish asset will usually recover after completing a five-wave retracement before resuming its downtrend. The analyst’s chart predicts a short-term breakout for Bitcoin towards $17,500 before another five-wave correction towards $15,600. The crypto strategist also says Bitcoin looks weak on the higher timeframe after BTC bulls failed to sustain last week’s rally. Smart Contractor also monitors the US Dollar Index (DXY), which measures the value of the US dollar against a basket of fiat currencies.
Traders are watching the performance of the DXY as a strong index suggests investors are moving towards the safety of the US dollar at the expense of risky assets like cryptocurrencies. According to the analyst, the monthly chart’s DXY looks bullish after taking a sample of its diagonal resistance. “We also saw a multi-month DXY breakout in the trailing diagonal on Friday, which is not good for risk asset bulls. Again, time to get on the defensive; stay safe.”