Market Overview: Bitcoin
- This week, Bitcoin did a strong bull breakout of a Cup and Handle pattern that I have been talking about since a long time.
- Last week’s report anticipated fairly well how the scenarios that would play out this week would unfold.
- If you want to enjoy this week’s piece, we suggest you to read first the previous week report.
Bitcoin
The Weekly chart of Bitcoin
- Context and Transition
- Bitcoin traded in a trading range for 8 months in 2024.
- Price broke above the range’s high and completed its measured move.
- Early 2025 printed a double-top plus a strong bear surprise bar that flipped the market to “always in short.”
- Given that bear bar’s power, a second leg lower or sideways was the base case.
- Bears failed to extend:
- Big lower tail before the surprise bar signaled weakness.
- Price quickly re-entered the double-top zone and closed the breakout gap.
- Result: bears never seized clear control.
- The 12-month moving average overlapped the 2024 breakout zone, creating a confluence support shelf.
- Shift Back to Long
- Q1 2025: price was off 30% from Q4 2024 highs, triggering institutional buy programs during re-allocation.
- A textbook High-3 pattern formed.
- A few weeks later, a strong bull bar closed above the 3-month moving average and flipped bias to “always in long.”
- Drawdown fully recovered; price was in a strong bull micro-channel and printed a cup-and-handle.
- Markets resist regime shifts; resuming a bull trend straight from “always in short” is statistically bullish.
- First pullbacks in a fresh bull leg almost always fail to reverse; odds favored continuation.
- A tight sideways-to-down pause ended with a High-2 buy signal two weeks ago.
- High-2 Mechanics
- We have said that the High-2 was a legitimate entry trigger.
- The follow-through was not strong, but we have said that bulls were looking resilient since we were expecting sellers – Q2 net sellers institutional rebalances – and bulls held well.
- We have also said that buying 1 tick above the previous all-time high was also a reasonable place to buy and a higher probability than High 2.
- Bulls were eyeing a bull breakout.
- Bull Breakout and Targets
- We have said, before the bull breakout, that probabilities were:
- 60% to hit $120,000 before tagging the June low.
- 40% to reach $130,000 before tagging the June low.
- This week, the price broke above the previous all-time high.
- The bull breakout bar is strong at the time of the writing.
- On IBIT ETF, which already closed on Friday, the bull bar is a strong bull bar closing practically on its high.
- Monthly measured move objective is around $120,000.
- Extension toward $140,000 remains credible: measured move based upon the cup and handle.
- After such a breakout, a second leg is likely.
- Even if there is a sharp retracement, the close of IBIT ETF from this week, of (this week’s Bitcoin spot Friday’s close), will be likely tested.
- Bulls expect testing $123,000 this next week.
- $120,000 – $123,000 there might be a pause due to profit takers.
- Trade Management Ideas
- 1:1 of the High-2 has been reached. Closing 50% of the position allows traders to run a free trade.
- If I partially close the position by half, would not suggest putting stop at breakeven: likely buyers below this week’s low.
- Do not close partially and trail stop at the 3-month moving average also reasonable, but lower probability of making money.
- Give 2–3% margin below the moving average.
- What Now
- Market stays in a tight bull channel.
- There is a gap open with the current price and previous high (breakout point) and also the previous highest close (body gap).
- While both gaps remain open, the likelihood is the bull trend continues.
- Bears need a strong bear bar for their best scenario: a failed bull breakout, and test the High-2 and June lows.
- Probabilities
- 70% there is, at least, a second leg sideways to up.
- 30% of reversal down to bull breakout low and do not come back to Friday’s close.
- Failing back to the June low is possible, not shocking.
- A direct drop to the 12-month moving average would surprise, unless achieved via sideways drift first.
The Daily chart of Bitcoin
- Trading Range Anatomy
- We have been assessing the trading range on the daily chart with high precision.
- Last week we have said that after 5 attempts to breakout the trading range, there was an increased chance of a successful breakout happening.
- We have said that traders should stop fading breakouts.
- This week, bulls broke strongly above previous highs.
- Bulls want this to be a spike on what will become a spike and channel bull trend.
- This might be a bull leg in what will become a trading range.
- The less likely scenario is that there will be a reversal and without test of this Friday’s close.
- Breakout Math
- The bull breakout looks good.
- Good distance run in a short period of time.
- Currently 4 bull micro-channel.
- Most bull bars closing above prior high.
- Micro gaps.
- How to Buy for Those That Did Not Trade the Breakout
- Buy weak reversals.
- Buy below prior bars, especially if they are bull bars and close above midpoint.
- Buy above “High 1.”
- Through Options
- Short put spread (bullish) with the short put strike below current price.
- Risk Management
- Stop loss is currently at the major higher low (MHL).
- There should be buyers below the current biggest bull breakout bar.
- Scenarios
- Warning if there is a 50% pullback and not a quick and strong reversal from there.
- If 50% pullback and there is not a notable reversal from there:
- This is likely a bull leg in what will become a trading range, not a spike.
Market analysis reports archive
You can access all weekend reports on the Market Analysis page.
