Market Video Report: Bitcoin
Duration 14 mins.
Summary
Despite a monthly “Always In Short” breakout, the bitcoin sits at critical support following a strong bull trend. Given Bitcoin’s historical resilience, the current position in the lower third of a major trading range suggests a high-probability reversal toward the $80,000–$90,000 equilibrium zone.
Transcript
Hi everyone, and welcome back to this week’s Bitcoin price action analysis. My name is Josep Capo, and I am a Trader and an author for the Brooks Trading Course website. Thank you for joining us today as we take a look at Bitcoin on both the monthly and the weekly charts. Let us jump right in and start by analyzing the monthly chart.
Right now, the monthly chart is in a bear breakout. The price has not printed a single bull trend bar since September 2025, and the bears have printed several strong bear bars in a row. In fact, the bears have been strong enough that we must consider the market to be an “Always In Short” market. Always In Short simply means that on a lower timeframe, the market is clearly in a bear trend. However, a price action trader, you know that this does not mean that you have to sell. Actually, there are specific contexts where this exact situation can be a great buy setup. When does this happen? It happens when the Always In Short flip is immediately preceded by a very strong bull trend, which is exactly the case we have here. Not only that, but the price is sitting right at a critical support level, which is the higher high area from before the 2021 high became the all-time high for many months.
Now, if you take this trade and buy this bear breakout, where is your stop loss? In theory, in these situations, you have a 60 percent chance that the market will reach the all-time high before it reaches a measured move down. If you look at the chart, that measured move down actually goes to zero. I have been mostly agnostic with this asset since I started writing these reports, because I never trust the extreme enthusiasts or the negationists. Objectively speaking, the mathematical chances of Bitcoin going to absolute zero are extremely low. Historically, Bitcoin has experienced 80 percent drawdowns, and an 80 percent drawdown from the highs would still keep the price above the $20,000 level. This is obviously a pretty bad scenario, but if I have to define the objective worst-case scenario for Bitcoin, it is a test down to the $20,000 level.
Currently, the price action tells us that before trading much lower, the bears first need to break the 2024 bear flag. If they attempt that, there will very likely be strong bulls waiting to buy above the $50,000 level. If you look at the chart, there was a huge bull breakout previously, and when the gap created by that breakout was later tested, the market reversed quickly higher because traders found value in that area. So now, this is a clear area of equilibrium that the price has to break, which is not an easy task. The strong bears know that the bulls were completely comfortable buying here, so if I were a bear, I would be looking to take my profits in this zone.
You might wonder why I was never a bear during this bear breakout. The reason is based on probabilities: the absolute best thing you can do during bull trends is to buy bull flag failures, because they will fail 80 percent of the time. The second best thing you can do in a bull trend is to buy a bull breakout above a bull flag, which gives you a 60 percent chance of success. The third best thing you can do is to sell bull breakouts of bull flags, which only gives you a 40 percent chance of succeeding. To trade these, you need to understand the variables of the trader’s equation. For a bull flag bear breakout failure, your target is the high of the bull flag, and your stop loss is twice the reward, giving you a 1 to 2 reward-to-risk ratio. For a bull breakout of a bull flag, your target is a 1 to 1 reward-to-risk ratio and a measured move up, placing your protective stop loss at the low of the bull breakout. If that bull breakout fails, your target is twice the risk, and the stop loss is placed at the measured move up, which was the original bull breakout target.
Why does this specific math work? I do not know for absolute certain, but it is probably because of consensus risk adjustments among the institutions. For example, if you buy the 60 percent chance of a bull flag bull breakout, by the time the market reaches your target, your initial stop loss is exactly the same. This means your open risk is now much higher than when you first entered your position. To logically reduce this risk, you can take partial or full profits, and if a lot of institutional participants do this simultaneously, it creates an order imbalance that favors the bears. This is exactly why, once the market reaches certain technical targets, the price reacts and often starts to pull back.
Now, let’s begin by looking at the weekly chart. Context is everything in price action, and right now, we are either in a major bear trend or a major trading range. In the medium term, the market is definitely in a bear channel. However, because the market was previously in a very strong, long-term bull trend, the natural transition is for the bear channel to eventually weaken and become just legs within a long-term trading range. Markets always have inertia, and they strongly resist changing from a strong bull trend directly into an opposite strong bear trend.
Trading ranges typically have a couple of legs testing both their upper and lower thirds as institutions constantly probe the market for value. In this specific case, the current bear leg can be viewed as the second bear leg within a developing trading range. We had one leg down here, a pullback, and then a second leg down there. Sometimes, these second legs become complex, but the key takeaway is this: once there is a second leg down and you suspect the market is in a trading range, your job as a price action trader is to try to find excuses to look for a buy setup. Market inertia dictates that what follows a second leg down is a couple of legs up. More importantly, there is a high probability of a test of the middle third of the trading range, which always acts as a strong magnetic pull on the price as the market searches for equilibrium.
In this case, I suppose the major trading range spans from approximately $125,000 down to the $50,000 level. Right now, we are obviously trading within the lower third, and the ultimate area of balance—the middle third—would be between $80,000 and $90,000. So, that is exactly what I expect: the market testing the middle third of the trading range area at some point this year.
That being said, we formed a bear flag here, and the market is influenced by a bear trend too. As I have said before regarding the monthly chart, if I have the idea that the price has equilibrium sitting above, it is mathematically coherent for me to buy the low of the bull flag. The probability of this specific trade working is 40 percent. The stop loss is the bear flag’s measured move down, which, as you can see on the chart, is below 2024’s August low. The target is twice that risk, around $90,000, which acts as a magnet since it is around the middle third of the upper bear flag, which is an area of equilibrium.
Therefore, to me, this provides a good trader’s equation for buying long. You might ask, “What about shorting, isn’t there an 80 percent chance of a bull breakout failing?” But you must remember that the higher timeframe forces may push the price to equilibrium around $90,000. There is a highly plausible chance that we are in a major trading range and currently sitting in the lower third of that trading range. In trading ranges, the rule is simple: you sell high, and you buy low.
And this is all I got for you today. Thank you so much for watching the video, and I hope to read your thoughts in the comments. Moreover, you know we have a Discord channel, and if you tag me there I will happily try to answer your questions. I wish you a wonderful weekend and a good week of trading ahead!
Market analysis reports archive
You can access all weekend reports on the Market Analysis page.
