Bitcoin's 40% jump didn't appear out of nowhere

On Thursday, we showed you how Elliott Wave analysis set the stage for Bitcoin's fall to $7,700 in tendays before Mark Zuckerberg's testimony about Libra. At the time of writing, the cryptocurrency barely held above $ 7,400, and many thought it was prone to decline even more. Since Bitcoin is one of our premium tools, we intentionally left some information two days ago. Traders familiar with the basic rules of the Elliott Wave Principle must have understood this for themselves. The information that we hid was available to our subscribers on October 16. On that day, they received the schedule that you see below. It shows that Bitcoin's 40% growth over the past 12 hours did not appear unexpectedly.

One of the basic rules of Elliott waves is thateach five-wave impulse is followed by movement in the opposite direction. The decline in bitcoins from $ 10,949 looked almost like an impulse pattern. Wave 5 was the last missing piece. That is why ten days ago we thought that "as soon as wave 5 is over, there should be a bullish reversal ...". Of course, there was no way to predict the speed and severity of recovery. In addition, we thought that resistance at around $ 8800 would at least slow the bulls for a while. Well, we didn’t get it right, as the updated chart below proves. The important thing is that the analysis of Elliott waves prepared us for a bullish reversal at a time when most traders were extremely bearish.

Wave 5 ended at $7293 on October 23.We didn't know it would be the bottom at the time, but bottom fishing isn't a good idea anyway. The important thing was that the decline from $10,949 could already be considered a full five-wave impulse. From a wave trader's perspective, this meant that there was no room for short positions in the $7,300 area. As of this writing, BTCUSD is hovering around $9,300 after jumping to $10,350. Now, instead of looking for external factors to explain Bitcoin's surreal rise, it's time to focus on patterns again. If the pattern managed to warn us in this reversal, perhaps the pattern will warn us in the next one.

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Now the handbook for wave enthusiasts, “The Elliott Wave Principle,” can be found in free access here