On February 17, 2018, we said of Bitcoin:
“…before a new high (substantially above the $19,343) is achieved, we expected a retest of the $6,914.26 level (or something close, like, $7,000-$7,200).”
We arrived the conclusion that the price should have a retest of the initial low of $6,914.26 after reviewing the three prior peaks and the subsequent declines and the retesting of the initial declines.
| peak | peak date | initial low | initial low date | % change | retest date | final low | total % decline |
| 29.60 | 6/8/2011 | 14.65 | 6/11/2011 | -50.51% | 7/4/2011 | 2.05 | -93.07% |
| 230.00 | 4/9/2013 | 68.36 | 4/16/2013 | -70.28% | 7/5/2013 | 66.34 | -71.16% |
| 1,147.25 | 12/4/2013 | 522.23 | 12/18/2013 | -54.48% | 2/25/214 | 177.28 | -84.55% |
| 19,343.04 | 12/16/2017 | 6,914.26 | 2/5/2018 | -64.25% | ??? | ??? | ??? |
It (retest) doesn’t have to happen, however, according to Dow Theory, it would be wise to expect a retest of the prior peak or a prior low. A retest of a low or high is also known as a double top when a new bear market is indicated or double bottom when a new bull market begins. For those with a bullish bias on Bitcoin, the following thoughts are appropriate for the current price action of the last two months.
"...before you can get a bull move, you have to establish a strong base -- and you have to test and retest that base many times." (source: Russell, Richard. Dow Theory Letters. October 18, 1989. Issue 1028. page 6.)
"Records of trading show that in many cases when a stock reaches top it will have a moderate decline and then go back again to near the highest figures. If after such a move, the price again recedes, it is liable to decline some distance.” (source: Hamilton, William Peter. Stock Market Barometer. Harper and Brothers. 1922. page 36.)
We think that the based on the price action we’ve seen with Bitcoin, there is going to be retest of the prior low at $6,914.26. In addition, the failure or success of holding at the retest level will go a long way in determining the direction of the price, in a dramatic fashion.
