Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24
How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - 17th Feb 24
Why Rising Shipping Costs Won't Cause Inflation - 17th Feb 24
Intensive 6 Week Stock Market Elliott Wave Training Course - 17th Feb 24
INFLATION and the Stock Market Trend - 17th Feb 24
GameStop (GME): 88% Shellacking Yet No Lesson Learned - 17th Feb 24
Nick Millican Explains Real Estate Investment in a Changing World - 17th Feb 24
US Stock Market Addicted to Deficit Spending - 7th Feb 24
Stocks Bull Market Commands It All For Now - 7th Feb 24
Financial Markets Narrative Nonsense - 7th Feb 24
Gold Price Long-Term Outlook Could Not Look Better - 7th Feb 24
Stock Market QE4EVER - 7th Feb 24
Learn How to Accumulate and Distribute (Trim) Stock Positions to Maximise Profits - Investing 101 - 5th Feb 24
US Exponential Budget Deficit - 5th Feb 24
Gold Tipping Points That Investors Shouldn’t Miss - 5th Feb 24
Banking Crisis Quietly Brewing - 5th Feb 24
Stock Market Major Market lows by Calendar Month - 4th Feb 24
Gold Price’s Rally is Normal, but Is It Really Bullish? - 4th Feb 24
More Problems in US Regional Banking System: Where There's Fire There's Smoke - 4th Feb 24
New Hints of US Election Year Market Interventions & Turmoil - 4th Feb 24
Watch Consumer Spending to Know When the Fed Will Cut Interest Rates - 4th Feb 24
Blue Skies Ahead As Stock Market Is Expected To Continue Much Higher - 31st Jan 24
What the Stock Market "Fear Index" VIX May Be Signaling - 31st Jan 24
Stock Market Trend Forecast Review - 31st Jan 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

What’s next for Bitcoin Price – $56k or $16k?

Currencies / Bitcoin Jan 24, 2021 - 02:49 PM GMT

By: Chris_Vermeulen


Bitcoin traders and enthusiasts are riding the wave after the incredible rally from $9,000 to $42,000 throughout Q4:2020.  It certainly was an incredible run – more than quadrupling in value in less than three months. Now we find ourselves in an early 2021 corrective phase which will end in either another Breakout/Rally attempt or an Excess Phase (Blow-off) Top.  This article highlights both potential outcomes because at this stage it is difficult to determine a single high-probability outcome.

Before I continue, I urge readers to review our How To Spot The End Of An Excess Phase article from November 27, 2020. You can re-read it at This is an excellent primer for the content of this current research article.

What A Bitcoin Breakout Would Look Like

Let’s take a look at what a Breakout/Rally technical setup in Bitcoin would look like in the near future.  Looking at the chart below, price must hold above critical support near $27,800 as any new lower low would constitute a continuation of the Bearish downtrend.  Therefore, any renewed rally attempt would likely initiate from levels near $28k (or just below this level). 

Using a Fibonacci Price Extension, we can see the $46,280 (0.618) and the $56,190 (1.0) Fibonacci Extension levels are key potential upside price targets if a breakout/rally resumes.  We are measuring the most recent bottom, in late November, to the current high price level, then aligning the Fibonacci price extension bottom to the current price lows (near $30,260).  This allows us to see future potential price target levels if this rally/uptrend continues.

Again, it is critical that the support level near $27,800 holds and price lows do not breach this level.  Any breach of this support level would constitute a “new lower low” in Fibonacci Price Theory – which suggests a downtrend is continuing.

What A Bitcoin Breakdown Would Look Like

The opposite aspect of this recent peak is that it may be setting up as an Excess Phase (blow-off) Top, as we can see the #1 (extreme rally) and #2 (sideways flag) setup in price recently.  The completed Excess Phase pattern consists of five total processes:

  1. The extreme upside price rally
  2. The TOP, followed by a moderate downside price trend that sets up the FLAG
  3. The breakdown of the FLAG trend, which then targets a broader support level
  4. The breakdown of that support level, which then targets the ultimate bottom/momentum base level
  5. Once the ultimate bottom/base is established, then a new momentum/bottom begins and trend usually attempts another rally attempt.

Be sure to sign up for my FREE webinar that will teach you how to find and trade my BEST ASSET NOW strategy on your own!

Obviously, when you look at the Bitcoin to USD chart (below), it is fairly easy to identify the #1 and #2 setup of the Excess Phase Top.  The next question is will price breakdown and attempt to move below the $27,800 recent low support level or will it hold above this level, prompting another rally attempt.  If price breaks below the $27,800 support level (near recent lows on January 11, 2021), then we need to be very cautious of the broader Excess Phase Top process continuing and a continued breakdown resulting in lower price trends.  If the $27,800 support level holds, as we suggested in the Breakout/Rally example above, then there is a strong chance that $42k to $56k could be the next upside targets.

I understand that readers and traders want to have more clarity on the direction Bitcoin will go, but ultimately, we need price to complete the next phase of this process. It all hinges on the current $27,800 support level right now.  As long as that support level holds, then there is a very strong possibility that another upside price rally will begin at some point in the future.  If it is broken and the Flag Breakdown continues, then it would appear the Excess Phase Top has moved into Phase #3 and will likely continue to unfold.

Why wait for Bitcoin to begin a new trend – Stock sectors are moving

Even though we will wait and see on Bitcoin, we see a wide variety of other sectors to play instead of holding out for the right Bitcoin trade. We have seen some explosive trading opportunities in sectoral ETFs despite the pullback in Bitcoin and other assets. One of our Best Asset Now Hotlist ETFs has grown by 23.55% since we identified its trigger a short 9 days. Some of our subscribers that traded options on that BAN Hotlist trigger did really, really well!

If you love Cryptos or not, don’t miss out on the opportunities that are setting up in the broader, global market and stock sector ETFs with our BAN strategy. If you want to improve your own trading strategy and win-rate, then you need to subscribe to BAN Trader Pro to get my daily BAN Hotlist, my pre-market video walkthrough of the charts every morning, and my BAN strategy trade alerts.

Stay safe!

Chris Vermeulen

Chris Vermeulen has been involved in the markets since 1997 and is the founder of Technical Traders Ltd. He is an internationally recognized technical analyst, trader, and is the author of the book: 7 Steps to Win With Logic

Through years of research, trading and helping individual traders around the world. He learned that many traders have great trading ideas, but they lack one thing, they struggle to execute trades in a systematic way for consistent results. Chris helps educate traders with a three-hour video course that can change your trading results for the better.

His mission is to help his clients boost their trading performance while reducing market exposure and portfolio volatility.

He is a regular speaker on, and the FinancialSurvivorNetwork radio shows. Chris was also featured on the cover of AmalgaTrader Magazine, and contributes articles to several leading financial hubs like

Disclaimer: Nothing in this report should be construed as a solicitation to buy or sell any securities mentioned. Technical Traders Ltd., its owners and the author of this report are not registered broker-dealers or financial advisors. Before investing in any securities, you should consult with your financial advisor and a registered broker-dealer. Never make an investment based solely on what you read in an online or printed report, including this report, especially if the investment involves a small, thinly-traded company that isn’t well known. Technical Traders Ltd. and the author of this report has been paid by Cardiff Energy Corp. In addition, the author owns shares of Cardiff Energy Corp. and would also benefit from volume and price appreciation of its stock. The information provided here within should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. Technical Traders Ltd. and the author of this report do not guarantee the accuracy, completeness, or usefulness of any content of this report, nor its fitness for any particular purpose. Lastly, the author does not guarantee that any of the companies mentioned in the reports will perform as expected, and any comparisons made to other companies may not be valid or come into effect.

Chris Vermeulen Archive

© 2005-2022 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in