Market Overview: Bitcoin
- Last week was a good follow bar after triggering the High 3 setup
- Bitcoin rose +12% this week
- The move confirms the bull pressure we’ve expected since late March
- April was expected to deliver a new leg up, it just did
- Next Wednesday is the last trading day of April’s monthly candlestick
- So far, April is an outside up bar, Bitcoin gains are currently around +15% since March close
The Weekly chart of Bitcoin
- Bitcoin traded between $50,000 and $75,000 for most of 2024
- That range broke out through $74,000, targeting the $100,000 level
- The move hit $100,000 by November, extended to $108,000
- $100,000 acted as a profit-taking zone, funds likely trimmed there
- Instead of collapsing, Bitcoin formed a three-month double top
- Neckline near $90,000
- Correction brought price back to test $75,000
That area mattered:
- It’s the 2024 range’s breakout point level
- It aligns with the IBIT ETF’s breakaway gap
- Buyers defended the structure a sign of strength
There’s was evidence of panic selling
- Large players were bulls taking profits, not bears
- Matches Q1 rebalancing activity
- 30% drop led to trimming, then we expected Q2 net inflows (only in rebalance terms)
- Bitcoin formed a High 3 (H3) reversal setup two weeks ago
- The pattern developed off the year’s low, near $75,000 support area
- Last week we stated that the follow-through was good enough for the bulls, after the H3 triggered
- This week printed a strong bull bar, validating the setup
The weekly structure continues to favor patient bulls:
- Buyers are now about 1x risk in profit
- Most will adjust stops to breakeven, scale out partially, or protect their position somehow.
You may recall this setup was not high-probability. It was a reversal pattern inside a bear channel. That said, we discussed that bulls were trading it for 2:1 or better reward.
- Trend traders might still wait for a close above around all-time highs to enter
- Bears lack a clean short setup. Selling into strength has failed
- Short setups might become attractive again near all-time highs
Do you consider this breakout strong enough to justify fresh long exposure?
The Daily chart of Bitcoin
- Bitcoin has been inside a broad bear channel since topping at $108,000. This channel has now broken.
- The price bounced from the 200-day SMA (IBIT), also near the 365-day SMA on the spot chart
- These were clean support zones, discussed in earlier reports
- A simple swing setup that we mentioned played out well:
- Buy at moving average
- 5% stop, 10% target
- None of these trades were stopped out. That gave confidence to bulls
- Tuesday: Gap up with strong bull bar, closed near high
- The bulls clearly did a bull breakout of the 21-day EMA (or 30-day EMA on Bitcoin Spot)
- This matched the breakout pattern bulls were watching for
- A sign of strong bulls and weak bears
- We said before that buying after a gap and strong close would invalidate any bearish thesis
- All gaps from the bear channel are now closed
- This is catching overhead resistance from trapped bulls
- It also increases the probability that the next leg higher continues cleanly
- A pullback would attract many more bulls than the current breakout
- They are watching for a classic second leg setup
- If that forms, the second leg up could target $100,000 or even $110,000
- Bears might re-enter around $100,000, a level where there might be more trapped bulls
- Since $90,000 bears will be watching for possible reversal patterns
- Without a top structure (like a wedge or double top), bears remain weak
- If there is a reversal down from here, more likely due to trapped bulls selling than bears shorting
- Will bulls step in again on the first pullback after the breakout?
- I think they are looking ways to enter, such as:
- Reversals from the 21-day EMA (or 30-day EMA on Bitcoin Spot)
- Reversals from a 50% pullback based upon the size of the bull leg
- High 2 or High 3 setups (micro double bottom or wedge bottom formations)
- I think they are looking ways to enter, such as:
- Does this mark the start a bull trend or this are just bull legs in a trading range?
- For now I expect just legs in a trading range
- How will bulls respond if $100,000 is tested again?
- $100,000 and the current all-time high are the major resistances to watch
What are you watching for next week? Share your thoughts in the comments!
Market analysis reports archive
You can access all weekend reports on the Market Analysis page.
