A crypto analyst who correctly predicted Bitcoin’s (BTC) 2018 bottom believes the king cryptocurrency is poised for another corrective move on its way to establishing a new bear market low.
Smart Contractor, a pseudonymous analyst, tells his 216,200 Twitter followers that Bitcoin’s recent rally from its current bear market low of $15,546 is likely to come to an end.
Smart Contractor employs Elliott Wave Theory, a technical analysis approach that attempts to forecast future price action by observing market participants’ psychology, which tends to manifest in waves. A downtrend, according to the theory, consists of five waves, with the asset experiencing brief bounces during waves two and four.
Bitcoin appears to be on the final leg of its wave four bounce, preparing for a final run toward $18,000, according to Smart Contractor’s chart. The analyst expects BTC to continue its downtrend to its target price of around $14,500 in order to complete the five-wave cycle.
At the time of writing, Bitcoin is trading for $16,979, implying a nearly 15% drop if BTC reaches Smart Contractor’s bottom target.
The crypto strategist is also keeping a close eye on the US dollar index (DXY), which he believes is showing signs of strength.
Traders closely monitor the DXY because a strong index indicates that investors are selling risky assets such as Bitcoin and stocks in favor of the US dollar.
Meanwhile, fellow Elliott Wave practitioner Credible believes Bitcoin can break through the $18,000 resistance level. According to the analyst’s 336,200 Twitter followers, Bitcoin is in an uptrend on the one-hour chart and is due for a big bounce.
According to Elliott Wave theory, an asset in an uptrend also goes through five waves, with waves one, three, and five being upward rallies. According to the analyst’s chart, BTC will end its wave two corrective moves at $16,400 before launching into a wave three surge above $18,000.