Bitcoin (BTCUSD)

The market looks strong, and it’s sending us a pretty clear message. A failed signal is often the most reliable one. So, the wave count has been adjusted, as the recent move doesn’t really look corrective anymore. We will wait and observe how the market develops going forward.

Price has now decisively moved above TL6. Could this mark the onset of a bullish market phase? If so, the months ahead may prove to be exceptionally dynamic and full of opportunity.

Revised count ...

Update ...

In a strongly trending Bitcoin market, the RSI 40/70 mean reversion framework tends to lose effectiveness due to the absence of meaningful pullbacks.

To address this, traders must shift toward breakout-based execution. Despite having a lower win rate than mean reversion, breakout strategies can offer significantly higher payoff potential in strong momentum environments, where price moves aggressively.

RSI remains a relevant tool in this context. A practical implementation involves initiating long exposure on the first breakout above the 70 level following a corrective phase, signaling the resumption of bullish momentum.

Wave 5 is likely approaching its completion, with a magnitude roughly comparable, though slightly smaller than Wave 1. What we are currently observing appears to be the beginning of a corrective phase, which typically unfolds in a three-wave, often complex structure. However, from a behavioral perspective, the price action reflects characteristics of mean reversion.

What’s interesting this time is that we entered the market when RSI pushed up to the 70 level (#1). After that, Bitcoin went into a short consolidation before continuing its move higher.

As price got close to the 0.618 target, there was a strong rejection that pushed RSI back below 70. That area is usually a nice spot to take profit (#2), especially in a trending market.

For anyone interested in obtaining my MQL bar indicator for MetaTrader 5, I’ve attached the file here. I used Google AI to code it, and it took me less than five minutes to complete. Hope it brings some value.

The input parameters are structured around standard RSI thresholds, with the overbought (OB) level set at 70 and the oversold (OS) level at 30. These baseline levels serve as a general framework for identifying potential exhaustion points in normal market conditions.

However, the thresholds are dynamically adjusted based on prevailing market bias. In a bullish environment, the oversold level is elevated to 40, reflecting stronger underlying momentum where pullbacks tend to be shallow. Conversely, in a bearish market context, the overbought level is reduced to 60, capturing earlier signs of exhaustion as price rallies are typically weaker and short-lived.

Wave "/b" appears to have rallied only up to the 0.382 retracement level, suggesting a relatively limited corrective move. At this point, I believe the market has transitioned into wave "/c". Despite this development, my current bias remains bullish for the time being, as the overall structure still supports the potential for further upside.

Price is still playing within yesterdays range
Tried to breakdown but was supported.
There might be an opportunity to gain some quick upside.
All depends on whether the stock market is risk on imho
The box is yesterdays high and low on my chart

It appears that the 0.382–0.618 zone continues to hold with stability. From a structural standpoint, wave "/c" is likely complete, and bitcoin is now transitioning into a sideways consolidation phase. At this juncture, two primary scenarios emerge: either the market develops into a more complex corrective structure, or bitcoin resumes its upward trajectory in the near term. For a sustained impulsive move to materialize, a strong catalyst will be required to generate sufficient momentum and validate the continuation.

Patience in executing the RSI 40/70 strategy was truly tested this time. There were two key zones where RSI dropped below 40 (#1 and #3), with the latter providing an opportunity to accumulate at a more favorable, lower price level.

The key question then arises: should we enter with the same position size as before (#1), or increase our size to improve the overall average entry? The answer lies in disciplined risk management. While scaling in with a larger position can lower the average price, it also increases exposure if the setup fails to play out as expected. The probability of failure must always be accounted for. Ultimately, toward the end of the session, Bitcoin surged, presenting a timely opportunity to exit the position with profit (#5).

I continue to classify the recent price action as an impulse structure. This is primarily due to the fact that wave "/4" does not overlap with wave "/1" on a closing basis (despite minor wick overlap), thereby preserving the integrity of the impulsive count. At this stage, I believe bitcoin is undergoing a corrective zigzag phase. The key probabilistic turning zones are identified around 74.8K and 74.3K, where potential support and reversal may emerge.

Overall, my bias remains bullish. For today’s execution, I will continue to apply the RSI 40/70 framework as the core strategy for navigating intraday opportunities, aligning entries with mean reversion conditions within the broader bullish context.

The core dilemma of mean reversion lies in this: when no pullback occurs, the RSI 40/70 strategy becomes ineffective, not because it lacks profitability, but because the required setup simply fails to materialize in a strong, momentum-driven market. This highlights a fundamental limitation of the approach, as it is inherently built on mean reversion principles, which tend to break down when price trends aggressively in one direction without offering meaningful retracements.

It is important to understand that there will be certain days when the RSI 40/70 strategy remains quiet and produces no signals. This is a normal characteristic of the system, particularly during strong trending conditions where the required mean reversion setups simply do not form.

In my view, the optimal solution is to integrate a long-term trend-following approach with an intraday mean reversion framework, allowing traders to capture the primary market trend during strong directional moves where pullbacks are minimal, while still utilizing the RSI 40/70 strategy to exploit short-term price oscillations in ranging conditions.

By combining these two complementary approaches, the system becomes more robust and adaptable to different market environments, ultimately producing a smoother and more consistent equity curve over time.

Based on the current Bitcoin structure, wave "/4" appears to have reached completion, with wave "/5" potentially targeting the 75.7K region. At this stage, the 0.618 Fibonacci level is being used as the key reference for the wave "/5" projection. We will continue to observe how price develops around this zone for further confirmation and potential extension signals.

The decline of wave "/4" below the peak of wave "/1" represents a clear violation of core Elliott Wave principles, effectively invalidating the previous wave count and requiring a reassessment of the overall wave structure.

At present, bitcoin continues to exhibit characteristics of a corrective phase within a broader impulsive sequence that originated on April 13. Price action remains well-contained within the key Fibonacci retracement zone of 0.382–0.618, which is consistent with typical corrective wave behaviour.

This brings us to a critical inflection point: are we witnessing the early formation of a new impulse wave, or is the market evolving into a more complex corrective structure ahead of its next decisive move?