Bitcoin Monthly Wedge Top and then Test of Major Higher Low

Market Video Report: Bitcoin

Duration 8:10 mins. AI is voicing Josep Capo’s original script.

Summary

Bitcoin reversed down strongly from a major wedge top, and a reversal upwards is likely, either after testing the Major Higher Low or by pulling back before doing a second leg down.

Transcript

Hi everyone, welcome to the first Bitcoin price action report of the year 2026 on the Brooks Trading Course Youtube Channel. My name is Josep Capo, and I’m a Price Action Trader and an author for the Brooks Trading Course website. Thank you for joining us as we take a look at Bitcoin on both the monthly and weekly charts.

First, I will start by highlighting that bitcoin kept growing in key areas, such as technology advancements, transactions volume specially on lightning network, corporation number of holders also grown significantly, and bitcoin has seen how major regions all over the globe kept increasing in number.  

Greatest economists do not expect bitcoin to replace fiat money, but see it as an asset that has properties like being a real asset, resistant to uncensorship and with a capped supply, enough to be a part of their holdings. The stock market keeps having unlimited theoretical potential, if demographics continue to expand. So, overtime, it will reach a top area in market capitalization and it will reflect the trust  that people have in their government economical policies. So far, there is still a lot of participants just speculating on it and there is still a lot of room to the upside.

Now, lets go to the charts. I am going to anlaye today the IBIT ticker, which is the Ishares bitcoin ETF, since it shows the participation since the ETF was approved by the SEC in 2024 and hence, the volume traded here represents the participation of different market players than the ones before this critical event (SEC ETF Approval i mean)

In the monthly chart, the market cycle is a either a Broad Bull Channel or a Trading Range. 

Here is a slide from my personal work, so, what’s inside it is my interpretation of brooks price action teachings and I can be wrong. 

If we are in a broad bull channel, we are currently, based upon my assessment, within the green zone, and there will be at least another spike upwards before the price trades below the major higher low.

Let me show how it looks on the chart. Look, in case of a broad bull channel market cycle we are here, the price will reverse up and do a bull breakout above highs. 

Now, anytime there is a deep pullback after a bull breakout, it trap traders at top, and hence, holding this position hurts and if they have the chance to exit breakeven on a test back, they are more likely to accept it than if the trade goes in favor and then pullback against them.

But i have said previously that this maybe not a broad bull channel market cycle but a trading range. If it is a trading range, it looks, on this timeframe, it does not look like volatile, or broad one. Of course if we go on lower timeframe, like the weekly chart, it looks like a broad trading range. 

But here it looks more tight than broad. If this is the start of a tight trading range, and by this I mean the strong bear reversal after the wedge top, this is also a sweet spot for traders. The last bull climax is the first leg in the range, and the bear breakout is the second. Second and third legs in trading range have higher chances of reversing than first or fourth, for example.

The reversal down from the wedge top, has been so strong that there will be likely a second leg down, therefore, i expect taht even if the price retraces upwards, there will be another leg down. 

As we will see in the weekly chart, the prices looks like they are in a level where participants are comfortable, is like they are accepting lower prices, which means that first reversal up will likely be minor, and also means that there is likely going to be another leg down testing the bear breakout low, and i would bet on a test to the major higher low.

Here, this green zone, is a gap between a higher high and a higher low. The bull breakout here was super strong, decisive. But more important, before that, there was this little range here and hence, fair prices. The price never traded back within this small trading range and then it traded heavily above. 

This means that, based upon institutional post ETF approval participation, they are accepting trading above this green level, it traded far more time there than the time spent at this small range, so I think that if the price gets to the major higher low, or within the range of the pullback, it will be a nice trading opportunity for bulls. 

As I have been repeating over and over during previous weekly report, traders expecting that the price will stay above the green level have an edge, in my opinion, in the options market, and i am referring to those that are options sellers. Options sellers are not always going short, so i encourage my viewers to learn some basics about options since it is a great vehicle to add to our price action understanding. 

In conclusion, the price is in a broad bull channel or in a trading range, the most likely outcome is that the price will reverse up at some point and test the at least the middle of this range. 

Now, let’s go to the weekly chart. 

The weekly chart had a strong bear breakout of the 252 day moving average. Before the bear breakout, the price did a small trading range, and hence, many participants traded higher prices. Now this trapped a lot of participants. Now, participants are accepting new prices, after many weeks sideways, it looksl iike the current area is going to have a crucial role in the upcoming weeks.

I believe that if the market trade upwards, it will find sellers, likely trapped bulls exiting their trades, either entering the prior range, or at the moving average if they scaled in lower. I expect that if the price does an upward test to there, it will come back again to current prices.

However, if I would have to bet in one direction now, I would bet that the test will be downwards instead of upwards. 

If it trades downwards, for all the things i have explained on the monthly chart, I would look to buy. Specially if the price gets to the green zone. Aggressive traders may place limit order there. Conservative traders may wait until the price reverses upwards. A reversal upward from such a zone, provides more often than not a second leg in the direction of the reversal.

Vice versa for the bears. If the price trades upwards, the $60 area here, which is the $105000 area of the spot price, it will be a good place to look to structure short positions, and the aggressive vs conservative modes applies the same, if you want a higher probability you should wait for the price to confirm, if you prefer better risk reward ratios, you are going to sell here with a limit orders. 

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