CYCLE 4 | Pull back complete!Hi team,
The purpose of this post is to close out our thoughts posted back in December 2024 with the suggestion of a possible 30-40% correction scenario we envisioned BTC might look to complete over the upcoming months, and what we wanted to see the bulls achieve in order for Cycle 4 to move into its final phase. Using this set up we can look towards where BTC may look towards from here.
These steps were outlined in the below two posts:
CYCLE 4 | CME GAP: Bull Cycle Period First Major Pull Back (Dec 20 - 2024)
CYCLE 4 | UPDATE - BTC Possible Next Move into Sell Zone (Feb 14 - 2025)
REVIEWING WHAT HAPPENED
In these posts we suggested
1) BTC will likely pull back and look for opportunities for support
2) We outlined the following levels
* Demand Zone and bottom of our defined Price Channel (92-90K)
* Daily Order Block (OB) (88.5-87.9k)
* CME GAP - down as far as ~77K and suggested a wick on the weekly down to our March 2024 high would not be out of the question
These levels all were taken out with our worst-case forecast achieved. Bulls then successfully preceded to complete the requirements we set out in these posts:
1) Uptrend Channel: No Open / Close weekly candle outside of, push back within and HOLD as support / HOLD and remain inside of our cycle uptrend channel (keep BTCs relationship with this trend line intact).
2) Daily OB: Flip and hold as support (BTC first attempt was rejected, held as resistance and allow a more bullish double bottom to be formed).
3) 20W SMA / 21W EMA: Flip and hold these moving averages
4) Price Channel: Push back inside and hold with a least two weekly candle closes.
WHERE TO FROM HERE
We are now at this point where BTC is now poised to look at a new ATH. BULLs are looking for BTC to finish off this cycle, and the set up aligns perfectly with our 'Sell Zone' box time frame we have put in place to help us navigate this cycle. Our 'MA OSCILLATOR RISK METRIC' (see charts in below posts for updates) has swung back into our RL level of 7 and moving back towards out cycle peak risk levels.
To achieve a 'proper' finishing ATH bulls are looking for in this zone we would want to see BTC start to making aggressive moves from here in Q3 & Q4 of 2025.
The biggest concerns for BULLs and the upcoming case for bears is the weekly bearish divergences BTC has put in place with our prior ATHs this cycle. This is most notable in the RSI shown in this posts original chart. From here there are 3 likely scenarios BTC could take based on rejects of our RSI dark black tend line and in place weekly bearish divergences. These Scenarios are marked 1, 2 and 3.
Scenario 1
BTC moves aggressively out of this price channel to new ATHs. There is a chance Bears could push price into a lower high here or put in a 'SFP' (Swing Failure Pattern) and sweep our prior high.
Scenario 1a
This would play out scenario 1a which bulls would want to see a retest and hold of the 20W SMA / 21W EMA before heading back up to attack high levels. We would expect our RSI moving Advertage to provide support in this level (see point 1a in the RSI chart). Failure to hold would strongly support the suggestion of cycle 5s bear market beginning IMO.
Scenario 2
A HOLD and bounce off the 20W SMA / 21W EMA again would give bears another chance to put bearish divergence with the weekly RSI. Watch for a higher high in price (likely a SFP or sweep of our current ATH) and a lower high closed in our Weekly RSI. This would be a scary scenario for the bulls.
BULLISH SCENARIO | BREAKING THE RSI BEARISH DIVERGENCE DOWN TREND LINE
The most bullish move BTC Bulls could achieve in all the above scenarios is to breaking above the RSI Bearish Divergence Down Trend Line (shown as green up trend arrows in the RSI). This will invalidate current bearish divergences and sent bulls focus on the more speculative upper targets for this cycle.
Hope you have found this post series an interesting watch as I have.
