BITCOIN This predicted the COVID bottom and now shows the top!

Bitcoin has lately taken a pause on its monthly rally that followed the July bottom, and what better time to look at some highly accurate old models and work around them to produce projections.

This is what I've done on today's idea, I've basically extended a high precision technical pattern of May 2019, which was extremely accurate at predicting the March 2020 market bottom (COVID flash-crash) and the subsequent multi-month rally that followed and brought BTC to where it is today:


As you see, that past idea was based on the BNC index, as at the time it was the BTC ticker with the longest data set. Now I have to mention at this point that geopolitical and other natural disasters such as the COVID pandemic cannot of course be predicted using technical analysis but more often than not such fundamental events are used by the markets as drivers/ catalysts in order to help at fulfilling a technical pattern.

So, the main idea behind the May 2019 analysis was that Bitcoin wasn't yet ready to start a strong rally as it had to fulfil the -0.382 Fibonacci extension trend-line. On today's analysis I've displayed these lines in blue to avoid confusion with other trend-lines on the chart. The -0.382 Fib was the lower extension of the Channel that started every time BTC started to rise after it made the bottom on the previous Cycle than the one we are currently at. As you see all such Channels (faded grey 0 - 1 Fib) start on the Higher Lows after the Bottom. In all Cycles since 2010, they have predicted the Bottom of the next Cycle with high accuracy.

The new contribution on today's study is that I've extended this methodology by incorporating the 0.618 Fibonacci retracement level within those small channels into the equation. That shows that the last major High before the Cycle's ultimate top (All Time High/ ATH) is on that 0.618 Fib, if that is after the dashed red trend-line (I will talk about this and the other trend-lines next). Practically that shows that the April High was the last High before the Cycle's Top and that BTCUSD should soon start the new rally towards the Top.

Where that Top can be? Well on the current Channel the 1.0 Fib (i.e. top of the Channel) is currently around $150k. I've marked the potential Peak Zone with this Green Area, which is the band within the 0.618 and 1.0 Fibs.

That brings us to the second addition of today's idea, the different zones within Bitcoin's Parabolic Growth Channel. Now, this is not a new subject, I've analyzed this extensively over the years. This time however, I put it into a better perspective by introducing the Buy, Neutral, Sell and Overbought Zones on top of the smaller Channels mentioned above. Keep in mind that all this dataset is on the very long-term 1W (weekly) time-frame, meaning that when calling Bitcoin overbought, it is within the context of multi-year cyclical behavior not just a single day, week or month.

So as you see the Buy Zone is within the bold green and dashed green trend-lines. The Neutral Zone is within the dashed green and dashed grey trend-lines. The Sell Zone is within the dashed gery and bold red trend-lines. Finally the Overbought Zone is within the bold red and orange trend-lines. All trend-lines have major contact points on series of 1W candles on this chart and this is why the form reliable zones. Right now the price is on the top of the Neutral Zone, which is where it's always been before the final parabolic rally to a new Cycle Top.

This aggregated analysis shows that expecting a $100000 target in the coming months, isn't at all an extreme expectation, in fact it falls under the more modest projections of the model. But where do you see the next top at? Do you think that my methodology presented on this idea is accurate at predicting tops and bottoms?

Feel free to share your work and let me know in the comments section!



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