Market Overview: Bitcoin
In the Bitcoin’s weekly chart, the price is fluctuating within a trading range but is approaching upper magnets and may test the all-time high soon. On the daily chart, a breakout above prior resistance levels suggests increasing bullish momentum, but with a significant Wedge Top looming, we will assess the likelihood of continued upward movement or a potential reversal.
Bitcoin
The Weekly chart of Bitcoin
The current market cycle for Bitcoin on the weekly chart is best characterized as a trading range environment. Specifically, it aligns with what can be termed a limit order trading range. In such an environment, traders strategically place buy and sell orders around key price levels, relying on historical support and resistance points. In this case, the range between $70,000 and $60,000 acts as the primary zone of interest. Traders are selling just above prior highs near the resistance at $70,000 and buying near previous lows close to support levels of $60,000 and $50,000. These psychologically significant levels served as battlegrounds where both bullish and bearish participants position themselves.
An analysis of the market’s always in position is crucial for understanding the prevailing sentiment. Despite the sideways movement, the last meaningful breakout on the weekly chart was bullish. This initial bull breakout led many to believe that a bull flag pattern was developing. However, the subsequent extended consolidation has balanced the market, with both bulls and bears still actively contesting control. Over the past few weeks, the market has displayed a breakout mode: it surged upward, only to retrace back to the breakout point, where buyers stepped in again.
This week, we observe a potentially strong bull bar emerging. Should this bar close near its high, it would represent a robust bullish signal. However, past strong bull closes near $70,000 were sold off quickly, indicating that sellers may return once again. Bears are eyeing the possibility of a Double Top formation, the current leg taking the shape of a Wedge Top. While these bears may attempt to sell the close of the bull bar, it is for a short-term scalp, since their primary targets lie near the low of this week’s trading or the trading range apex.
Bulls, meanwhile, remain confident that the broader bull trend will eventually push the price beyond $70,000. Despite the ongoing consolidation, they believe that the bears are losing ground and that the market will soon test the all-time high once again. Above the current price, several lower highs serve as magnets that could attract further bullish interest, the price wants to see what’s there. These levels are likely to see significant trading activity. Given the recent failures of bears to reverse the trend, it seems probable that the market will revisit these highs in the near future.
The Daily chart of Bitcoin
On the daily chart, this week’s price action has seen Bitcoin breaking out above a minor high and a prior higher high, both of which held significance as resistance points where traders had previously established bear positions. The ability of the bulls to push the price higher, despite the well-structured bear positions, highlights their strength in the current environment. As a result, Bitcoin is now trading above key resistance levels, further reinforcing the bullish outlook.
Throughout September, the price moved within a tight bull channel, and October saw the formation of a two-legged pullback. This pullback set a temporary bottom near $60,000, with a subsequent double bottom adding further support. This week’s breakout above the prior highs created new support levels, notably at the breakout points themselves, where traders will now be watching for potential buying opportunities in the event of a retracement.
Bears are pointing to the formation of a larger Wedge Top, which could signal an impending reversal. However, with the price so close to key magnets like the $70,000 level, it is likely that the market will continue to trade sideways or upwards before any significant reversal occurs. The path of the least resistance for now remains to the upside. Bears will likely need at least a micro double top to form before they can gain begin structuring trades.
From a bullish perspective, the path forward is clearer. They are aiming for a retest of the all-time high, with a two-legged measured move providing a potential roadmap. The bulls are also drawing measured moves from October’s pullback, and they are likely placing their stop losses below the recent breakout low or the major higher low from October’s pullback. Should a reversal down occur imminently, the first attempt is likely to fail, prompting another test of this week’s high before any sustained move lower can take place.
Traders should remain vigilant and structured in their approach. If you found this analysis helpful, feel free to share it with fellow traders, and engage with the ongoing conversation around Bitcoin’s price dynamics.
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