Chart of the Day - Wednesday, December 16th, 2020

Today’s Chart of the Day was shared on Twitter by Steve Strazza (@sstrazza). Bitcoin was the talk of the town today, as it soared to an all-time high above $20,000. Why do we care about all-time highs? Because at all-time highs, there is little to no overhead supply preventing price from moving significantly higher. When an asset is in unchartered territory like this, Fibonacci extensions are one of the only useful tools for ascertaining potential price targets. This is done by measuring a major decline, and multiplying that figure by a key Fibonacci ratio (1.618, 2.618, 4.236, etc...). Of course, most charting platforms have this as a preset tool so you don't have to crunch the numbers. Steve used three separate Fibonacci extensions, measured from the 2013-2015 decline, the 2017-2018 decline, and the 2019-2020 decline. All three of these Fibonacci extensions cluster around $30,000. In a comment to The Chart Report, Steve said, "As long as we're above the former highs, around $19,000, the next logical price target is around $30,000."