Educational BTC Analysis: Decoding BTC's Wave (C) Down

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Today we are going to understand Elliott Wave Teaching Points from the BTCUSD Daily Chart,
This chart sequence perfectly illustrates the difference between motive (impulse) and corrective waves, as well as the important structures and rules of a larger correction.

1. The Structure of a Corrective Pattern (A-B-C)The Big Picture: The overall movement, labeled Intermediate Wave (A), (B), and (C) (Blue), is a three-wave corrective pattern. This type of pattern moves against the trend of one larger degree (which have been an uptrend). The three-wave (A-B-C) structure is the classic way markets move in a counter-trend. Wave (A): The initial counter-trend move.Wave (B): A bounce or retracement that moves back in the direction of the previous trend, but fails to reach the start of Wave (A).Wave (C): The final, and often most powerful, leg of the correction, which is designed to complete the retracement. This wave is always structured as a five-wave impulse.

2. The Rule of Subdivisions: Corrective Waves are Internally Motive, Wave (C) is an Impulse: The report states that Intermediate Wave (C) is expected to unfold as a five-wave impulse sequence of a Minor Degree (Red) (Minor Wave 1, 2, 3, 4, 5).

Learning Point: This highlights a fundamental Elliott Wave rule: the C-wave of an A-B-C correction is a motive wave (it has a five-wave internal structure) because its purpose is to create strong directional progress and complete the larger correction. This is commonly known as a Zigzag correction (which has a 5-3-5 internal count for A-B-C).

3. Identifying the Strongest Move (Wave 3)
The Current Phase: The market is currently in Minor Wave 3 (Red) downwards.

Learning Point: In Elliott Wave theory, Wave 3 is typically the longest and never the shortest of the three motive waves (Waves 1, 3, and 5). This means the analysis anticipates the current move to be the most directional, high-momentum, and volatile part of the entire Intermediate Wave (C) correction. This is the "sweet spot" for trend traders.

4. The Principle of Alternation (Predicting Wave 4)
Upcoming Wave: The analysis projects a shallow Minor Wave 4 (Red) rebound.

Learning Point: While the chart doesn't show Wave 4 yet, this prediction is often guided by the Principle of Alternation. If the preceding corrective wave (Minor Wave 2) was a sharp, deep correction, the next corrective wave of the same degree (Minor Wave 4) is expected to be a sideways, shallow, or complex correction (like a flat or triangle). The prediction of a "shallow" wave 4 suggests Minor Wave 2 was likely a deeper, sharper retracement.

5. The Critical Invalidation Rule
The Invalidation Level: The report sets the critical invalidation price at 74,223, which represents the low or starting point of wave ((1)).

Learning Point: Wave ((2)) can never retrace more than 100% of Wave ((1)). By identifying a specific price level, we can assume that our study says price should not broke below that particular level, it provides traders with clear risk management parameters.

I. Current Wave Count Status

The analysis indicates that the previous upward corrective structure, designated as Intermediate Degree Wave (A) and Wave (B) (Blue), is complete. The market is now engaged in a significant downward movement within the larger Intermediate Degree Wave (C) (Blue).

This Intermediate Wave (C) is expected to unfold as a five-wave impulse sequence of a Minor Degree (Red) to the downside, fulfilling the final leg of the overall corrective cycle.

II. Detailed Downward Projection

The Minor Degree five-wave structure within Intermediate Wave (C) is currently positioned as follows:

Minor Wave 1 and Minor Wave 2 (Red): These waves are identified as complete.

Current Phase: The market is now unfolding Minor Wave 3 (Red) downwards, indicating the strongest portion of the bearish move is in progress.

Anticipated Completion: Following the completion of Minor Wave 3, the analysis projects a shallow Minor Wave 4 (Red) rebound, followed by the final impulse move, Minor Wave 5 (Red), to complete the entire Intermediate Wave (C) correction.

The ultimate completion of Intermediate Wave (C) will signal the end of the larger-degree correction (labeled as a corrective wave (2)).

III. Critical Invalidation Level

The integrity of this bearish wave count is contingent upon the price action respecting a critical support level.

Invalidation Price: 74,223

Significance: This price point represents the extreme low or starting point of wave ((1)), so Wave ((2)) correction Should not breach this level as per wave principles, if it makes lower low below 74,223 on the lower side, the current Elliott Wave analysis would be invalidated, requiring a revision of the entire wave structure and market outlook.

I am not Sebi registered analyst.
My studies are for educational purpose only.
Please Consult your financial advisor before trading or investing.
I am not responsible for any kinds of your profits and your losses.

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Hope this post is helpful to community
Thanks
RK💕

Disclaimer and Risk Warning.

The analysis and discussion provided on in.tradingview.com/u/RK_Charts/ is intended for educational purposes only and should not be relied upon for trading decisions. RK_Chaarts is not an investment adviser and the information provided here should not be taken as professional investment advice. Before buying or selling any investments, securities, or precious metals, it is recommended that you conduct your own due diligence. RK_Chaarts does not share in your profits and will not take responsibility for any losses you may incur. So Please Consult your financial advisor before trading or investing.