Video duration 7min 09sec.
Market outlook video reports for 2021:
Market outlook for Bitcoin
Market outlook for Bond futures
Market outlook for Crude oil
Market outlook for S&P500 Emini
Market outlook for EURUSD Forex
Market outlook for Gold futures
Video transcript
Introduction: Market outlook 2021 Bitcoin
Hi, everyone. I’m Al Brooks. Thank you so much for your attention. At the end of every day, I look at charts to try to get an idea about what to expect for tomorrow. I do the same at the end of the week, the end of the month, and now at the end of the year.
This is the New Year’s Day weekend, and I made a series of charts to create videos to give my thoughts about what to expect for major markets in 2021. I made six different videos – Emini, the bond market, the Euro versus the dollar Forex market, gold, crude oil, and Bitcoin.
Now, I want to add a disclaimer up front: with every additional tick that we see, the outlook changes. I’m giving you my perspective as of right now, the start of 2021. I hope that you find the information useful.
Bitcoin crytocurrency market outlook for 2021
In this video, I want to talk about one of the most interesting markets currently, and that’s Bitcoin. This is my outlook for Bitcoin for the coming year.
Weekly chart for Bitcoin
At the end of 2020, this is what the weekly chart looked like. Extremely strong bull trend. We had a good rally here, a better one here, and an even stronger one here. The bears hoped for a Double Top back here in early December, but instead of reversing down, we broke strongly to the upside. We’re almost to a Measured Move up based upon the height of this initial top. If we get there, which I’m sure we will, there might be some profit-taking. We may hesitate, pull back.
We have 3 big bull bars here. We had 5 big bull bars here, and this is what followed. We had a huge reversal down.
Is this going to be like this, and will we drop down and retrace almost the entire bull trend? I don’t think so. What’s different? Well, a lot of it is fundamental. You have a lot more institutional participation, and then additionally, this trend I think is stronger than that trend.
Measured Move target
Room to the Measured Move target, but it’s a minor target because most computers will not realize it’s there. I realize it’s there. We tried to top out here, and instead of reversing down or stalling, we accelerated up. That is a common situation that results in a Measured Move target and profit-taking around that target.
Also, we have some shrinking bodies. This body is bigger than this one. This one is bigger than that one. So there is some loss of momentum. And then you look at unusually big bull bars like that; they typically attract some profit-taking exhaustion, so those factors increase the chances that we’ll pause, pull back, go sideways, maybe down a little bit, starting soon.
There’s no top yet, and this rally is so incredibly strong. Even if we were to come all the way down here, the best the bears would get would be a Trading Range. When you look at this, odds are we’re going higher. We don’t know the path. It could be straight up, or we could go sideways and then up, or we could go down and then up, but chances are we’re going up.
Extreme Buy Climax
Huge bars means an extreme Buy Climax, and that typically attracts profit-takers. If you’re a bull, your stop is way down here and you don’t want to risk 60%, 70% of your investment. The easiest way to reduce risk is to take some profits to reduce your position size. So when you get an extremely strong rally, you tend to get some profit-taking.
The profit-taking may initially be only a bar or two. If it is, it’ll probably be a High 1 bull flag, a 1 or 2 bar pause, and then we’ll go a little bit higher. But if we do have a 1 or 2 bar pause and we go higher, chances are the next leg up will only be a bar or two and we’ll get more of a pullback.
So the trend resumption will be brief. If we have a 1 or a 2 bar pullback and then the bull trend resumes, it probably will be brief, and then we’ll probably get more of a pullback, more bars and maybe a couple legs sideways to down.
Example of accelerated Buy Climax
This is an example of an accelerated Buy Climax. We tried to top out here, and then instead we accelerated upward, similar to what we have in Bitcoin. This is from my Brooks Encyclopedia. I have a collection of a couple thousand slides. I use them in my chatroom to illustrate points.
As strong as this was, it was a bull trap, and we had a big reversal down, a couple legs down here – one, two – and it grew into a bigger two-legged pattern – one, pullback, two. I don’t think we’re going to retrace this much of the Bitcoin rally, but we might get down to the bottom of the Buy Climax. If the bears get a big bear bar closing on its low, or near its low like this, bulls will exit and we’ll probably get at least a small couple legs down.
Bitcoin accelerated up
This is, again, Bitcoin. We tried to pause or top out here, and instead accelerated up, like in the example that I just showed. Will we reverse down all the way to here or here, like in that example? I don’t think we’ll go here, but it’s possible over the next few months we may work back down here.
This is so strongly up, I think initially if we pull back, we might get 5 or 10 bars sideways to down. I doubt that we’re going to go straight down. When a bull trend looks like that, usually the first reversal is minor and all you get is a Trading Range. And even if we were to get a Trading Range, that Trading Range would need 20 or more bars before there would be close to a 50% chance that we would get a reversal down.
Concluding comments
Buy Climax. No top yet, but probably will attract profit-taking within the next few bars, next few weeks.
Again, that’s my take on Bitcoin for the coming year.
Close
Again, I’m Al Brooks. Thank you so much for your attention. I hope that you found some of this information useful. I want to wish you the best for the coming year as a trader, and I also want to wish you and your family a very wonderful 2021.
