It seems that Bitcoin has experienced a temporary peak in the price. No better time to assess what the downside targets might be for a price that has had a parabolic increase. In the last assessment of downside targets done on April 10, 2013 (found here) when Bitcoin was at $237.56, we said the following:
“Because the nature of parabolic peaks is to crash disastrously explains why the more moderate peaks of January 2012 and July 2012 did not give up more than 66% of the previous increase. The current parabolic increase in Bitcoin has a conservative downside target of $89.45 and an extreme downside target of $76.05.”
After our April 2013 downside projection, Bitcoin fell as low as $68 depending on the source as indicated in our June 26, 2013 review (found here). However, regardless of the source, Bitcoin declined below the extreme downside target of $76.05.
Our conservative downside target for Bitcoin, based on the peak closing price of $785.50 is $384.83. The extreme downside target is $261.83. The worst case scenario is for Bitcoin to fall as low as $152.83 as indicated by the red line on the chart.
As we’ve written many pieces on the topic of Edson Gould’s Speed Resistance Line, we’ve made some observations that we think should be highlighted at this time. For the first time, we’re going to provide what we believe might be an upside target. In the case of Bitcoin, the next conservative upside target is $1,154.49 if the most recent peak of $785.50 is exceeded. This is a tentative estimate based on observations of the many successful downside SRLs that we have run in the past. We’ll be on the lookout for what may come next.