I really don’t like predicting future price levels; there’s something disingenuous about it. It reminds me of all those marketers that pander to the very real attraction to wanting to know what the future is. The longer that I’ve been in this business, the more that I surrender myself to let the price do what it will, without my prognostication.
But there is one exception that I’ll play along with – Chart Patterns. Thomas Bulkowski is the master of applying statistics theory to this form of “art,” or another way to say it is that he brings the science to the black art of chart pattern analysis. And Bulkowski believes in the power of “price targets” with specific chart patterns.
So let’s apply a common one to Bitcoin, shall we? It’s called a “Cup With Handle” pattern
Let’s say we start with Bitcoin where it currently is.
That’s a nice uptrend on the weekly chart. Let’s make an assumption that “larger timeframes dominate the trend” and project that it will, at some point, re-test the 2017 high water mark:
That would put the price back up to around BTC $19,700 again. With me so far? Here’s the fun part; you can see the huge “cup”-based pattern forming, as the price plummeted down near $3000 and then back up again. This is the “Cup” part of the “Cup With Handle” pattern. There is normally a consolidation as the price nears the “neckline” which is this case would be $19.7k again. Then the price normally breaks higher and is off again on the uptrend.
But how far? This is what Bulkowski did…he put an average upper target on this pattern, and it was the depth of the cup extrapolated to the upside.
Here is the depth of the “Cup” pattern:
That’s about 15,500 worth of “depth.” Now if we extrapolate that onto the neckline price of $19.700, then we get our upper target:
Therefore we get an upper target of $35,200 for this swing and breakout above the recent highs. That would likely lead to the next Bear Market, but let’s not get ahead of ourselves.
And that’s how we can use charts and chart patterns to forecast potential forward targets!
Doc Severson
Westerville, OH