Fibonacci Extensions Can Help You Take Bitcoin ProfitsNicola Duke thinks that if the $4400 level is taken out next stop is $7000. I agree. If you take a look at bitcoin’s previous all time high it was halfway between a 4.236 and 6.854 Fibonacci extension of the ATH that preceded it. If you then look at the Fibonacci extensions in play now $4400 is important resistance and if taken out $7000 is certainly possible.Since bitcoin trading volume became significant in early 2013 with price over $20 there has not been a 6.854 extension in bitcoin from high to high. Legendary bitcoin trader masterluc has also mentioned even higher targets (use Google Translate.) You can also see higher targets in this Fibonacci extension chart drawn from $1163 high to $152 low:Going back in time you can see from the following chart how the $1163 high of November 2013 compared to the previous $259 April 2013 high:The chart shows the $1163 high reached halfway from the 4.236 to 6.854 Fibonacci extension levels. If history repeats that could mean the current bull cycle for bitcoin could end about $5500 to $6000. Every cycle is different though and this time could well be different. The severe decline of bitcoin price in December 2013 was tied to collapse of the MtGox exchange. The bitcoin ecosystem is much more robust now with many exchanges to provide liquidity.The beauty and utility of Fibonacci is a bitcoin trader could reasonably predict two years ago that bitcoin price could reach $4400. Just draw Fibonacci extensions from the previous $1163 all time high to the $152 low. Bitcoin routinely fulfills the 1.618 and 2.618 extensions. Fibonacci helps traders avoid taking profits too soon.The higher targets are lower probability though. There is a distinct possibility that the current bitcoin rally can run out of steam between $4400 and $7000 and we would then enter a multi-year bear market. You really want to be mostly out of bitcoin before the next bear market which will be painful. Start taking some profits now. However, there is also a rule to live by: never sell all your bitcoin.Using RSI To Take ProfitsI expect this bitcoin bull market to top out at $7000 but the top might be higher based on Fibonacci extensions. Here is where we use the RSI indicator on a three day chart as a secondary guide on timing to take profits. Check RSI on the three day Bitstamp chart:Closely monitor the RSI indicator on the three day BTC/USD chart. We are not in the danger zone yet but consider RSI above 80 to warn of a pending top. Above 85 on RSI start taking profits. As RSI reaches 90 you should be mostly out of bitcoin and in cash. If 3 day RSI goes over 90 we are dangerously oversold. In that case you should consider selling the majority of your bitcoin and look for shorting opportunities … if there is a crash there will be a dead cat bounce to short.Starting to take profits now is smart especially if you got into bitcoin early and bought under $100. Your faith in holding all this time has been proven right. Bitcoin can surprise though, so when you start selling into this rally keep some bitcoin, maybe 15% for the future. Be prepared to hold any bitcoin you keep in reserve through an extended bear market like we saw in 2014.