Market Overview: Bitcoin
Bitcoin‘s weekly chart is currently exhibiting a lack of momentum, much to the dismay of traders who anticipate a test of the all-time high in the near future. The market is stuck in a limit order trading range. Following a strong bull breakout earlier, a wedge bottom pattern continues to influence its price behavior. Meanwhile, on the daily chart, the scenario is slightly different—a stop order trading range governs the price action; despite long-term bullish expectations, many traders are structuring short positions around the $65,000 level.
Bitcoin
The Weekly chart of Bitcoin
The current market cycle on the weekly chart is characterized by a trading range that can be best described as a limit order trading range. In such environments, traders often place their orders based on key price levels, buying low and selling high, but in this particular case, the range is narrower than usual. As a result, traders are using limit orders to sell just above previous highs—most notably around the significant $70,000 resistance level—and placing buy orders below previous lows, near support at $60,000 and $50,000. These levels represent psychologically important support and resistance zones where both bulls and bears are participating.
Normally, analyzing the “always in” market direction offers a clearer view of the dominant force within the trading range. Typically, the last breakout gives us insight into the prevailing direction, and in this case, it was a bull breakout. Many see this as a potential bull flag, but the extended sideways action that has followed has leveled the playing field between bulls and bears. The price continues to fluctuate between $70,000 and $60,000, failing to break meaningfully in either direction. Over the past few weeks, a breakout mode pattern seemed to be forming, but rather than delivering a significant move, the price fell last week only to rise again this week.
One of the challenges in such a range-bound market is that breakout patterns can often deliver false signals. This is especially true when the price remains sideways for extended periods, as we have seen following the failed bull signal over the last two weeks. Despite the lack of a decisive move, many bulls are still betting on a higher low forming this week. If the current bar closes above the open, it may reinforce this hypothesis. Additionally, the wedge bottom that followed a failed bear breakout below the prior lower low offers bulls some hope of a test of the lower highs around $70,000. However, predicting trades within a limit order market is fraught with uncertainty.
The Daily chart of Bitcoin
On the daily chart, Bitcoin remains in a trading range market cycle, but unlike the weekly chart, this range is broader, making it more suitable for stop order traders. These traders, instead of placing their orders at key levels, are positioning themselves to profit from potential breakout moves. They typically buy above prior highs and sell below previous lows, anticipating that the breakouts will lead to sustained moves. However, their success depends on avoiding the upper third and lower third of the trading range, where breakouts are more likely to fail.
Understanding where these critical areas lie requires paying close attention to prior highs and lows. When the price moves towards a prior support level—such as a higher low or lower low—and reverses upwards, it signals that this area is likely part of the lower third of the range and that the next test will fail to breakdown. Conversely, if the price reaches a previous resistance level, such as a lower high or higher high, and then reverses downward, traders assume that this area is part of the upper third, and that the next text upwards will likely fail. This helps traders define the bounds of the trading range.
Recently, bulls attempted to push the price above the $65,050 level, which marked a lower high, but many of them are now trapped in their long positions. Bears, on the other hand, capitalized on this move, placing limit orders at $65,050 and subsequently taking profits as the price retreated to $60,000. A double bottom has formed near this level, suggesting that bears took their profits there. It’s unlikely that bulls will make another attempt to buy at $65,050 or even $66,550—the September higher high—since these levels have failed before, instead, they may exit their trades.
However, while it is unlikely, it is not impossible for bulls to attempt another run, actually, a second leg up may emerge from a strong bull trend that lasted 3 weeks in September. From a trader’s equation perspective, shorting around the $65,000 area still offers a statistically favorable outcome. Ultimately, any range may extend further, either to the upside, where the gap between the price and the previous higher high would close, or to the downside. Should a new trend emerge, whether it be a bull or bear trend, it will likely manifest with the formation of gaps—the price either holding below a prior lower low in a bear trend or above a prior higher high in a bull trend.
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