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Bitcoin agony Breakout Mode at the Bull Flag Top and 30000

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Market Overview: Bitcoin Futures

Bitcoin breakout mode at the bull flag top on the daily chart. During the week, the value of the crypto asset decreased by -1.48%. Traders are ready for a breakout attempt, or a big move up or down, next following weeks.

Bitcoin futures

The Weekly chart of Bitcoin futures

small bear body at bull flag top weekly chart bitcoin futures july 23 2023

Analysis

  • This week’s candlestick is a tiny bar with a bear body. Such small bars like this are commonly followed by a big size bar.
  • The daily chart contains a breakout mode pattern at the 50% resistance (or the bull flag top), which might provoke a big bar during the following weeks.
  • This year, the price was in a bull trend: higher lows and higher highs.
  • When the market cycle is a bull trend, the probability is that it will continue in trending higher.
  • A bull trend will break resistances 80% of the time. If the price can’t beat the 50% of 2022’s range resistance, this might be the end of the bull trend.
  • The price is stalling around $32000, and it is failing to close above 50% retracement of 2022’s bear trend.
  • Furthermore, when the market cycle changes, it will probably be into a trading range, instead of a bear trend or a bull breakout of the current bull channel.
    • At any moment that there is a reversal down, traders should expect buyers below prior higher lows, specially at major higher lows like the one around $19500.
    • The price will most likely hold the $20000 big round number if there is a reversal down.
  • Bulls:
    • They want to continue the bull trend and achieve their bull targets:
      • Head and Shoulders Bottom (HSB) Measured Move (MM).
      • Ultimately, the 2022’s high.
    • If the price returns to the HSB breakout point, they will still expect a reversal up and a resumption of the bull trend.
    • Their bull trend thesis is only over if the price goes sideways for a long time, or if the price trades at the major higher low.
    • It is a matter of time that the bull trend will transition in a trading range.
  • Bears:
    • The price is failing to close above 50% retracement, and hence, they think that a reversal down from here might be underway.
    • The price needs to close the gap between the price and the bull flag’s breakout point at around $28700, to lower the bull strength. Then, they hope that the price do not reverse up again from that point.
    • They need to create a lower high, for traders to expect a major trend reversal.
    • The best that bears can expect is a trading range instead of a bear trend.

Trading

  • Swing bulls:
    • A small bear body bar, following a retracement coming from a resistance, it is not a good buy signal bar.
    • Many swing bulls that entered after the last bull signal bar, will exit after a bear follow through bar.
  • Swing bears:
    • A small bear body bar, following a bull trend, it is not a good sell signal bar.
    • The Bears probably need a breakout below the moving average and then wait for a double top or a wedge top.

The Daily chart of Bitcoin futures

at bull flag top

Analysis

  • The daily chart of Bitcoin futures created a tight trading range at resistance, the bull flag top.
  • The context starts to look more like a trading range than a bull trend.
  • Within a trading range, traders buy low and sell high. If we are in a trading range, the bull flag top must be considered as ‘high’.
  • Bears consider this to be a failed breakout, that bulls can’t beat the resistance and that the price will break down the tight trading range. From the bull flag top to the bottom.
  • But, at the end, a breakout mode pattern has 50% chances of a bull or bear breakout.
  • Bulls:
    • They want a failed bear breakout of the breakout mode pattern and then reverse up.
  • Bears: They want either a strong bear breakout of the breakout mode pattern, or consecutive bear bars below the breakout mode pattern.

Trading

  • Traders are ready to trade, a breakout mode has 4 trade possibilities:
    • Bull Breakout.
    • Bear Breakout.
    • Failed Bull Breakout.
    • Failed Bear Breakout.
  • For a Breakout to be successful, traders want to see consecutive bars in the direction of the breakout. If instead they get bad follow through after the breakout, they will look to bet in favor of the “failed” side of the trade.

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