Update on Bitcoin: Dec 22, 2020

In our last regular update on BTC [see: Nov 17 Update], we noted that it had reached our Inverted Head and Shoulders target of 17,150 well ahead of schedule and was due to test the .886 Fib at 17,780.

Note that the red IH&S target at 17,150 is only slightly below the blue .886 Fib at 17,780. So, there’s plenty of overhead resistance here which, combined with a somewhat bearish RSI chart, argues for at least a breather. On the other hand, BTC has clearly popped out of the rising pink channel from its March 13 lows – always a positive from a momentum standpoint. If I thought DXY [92.30] was done dropping, I’d be inclined to take profits here. But, I don’t think it is. [Our forecast remains a] drop to 91.358 or even 89.88.

Whenever we get conflicting signals like that, it’s fairly likely that an alternative upside target will serve as a backtest target after the breakout.  That’s exactly what happened here. As it broke out of the pink channel, BTC rallied for another week before taking a 16.6% breather, ultimately backtesting 17,780 on Dec 9 and Dec 11.

Because DXY hadn’t reached support at 91.358 much less 89.88, though, BTC wasn’t done. As we noted on Dec 4:

USDJPY threw its hat into the bullish ring with a backtest of its broken TL, theoretically slowing DXY’s descent and still leaving a path for BTC to reach its 1.272 at 24,166 around the end of the year.

For those patient enough to let DXY’s decline play out, we were rewarded a few days ago with a tag of 24,166.BTC is now up 5.3X since its March lows. There are those calling for 100,000, 500,000 and even 1,000,000. Can it keep up this pace?

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