Market Overview: Bitcoin
Friday’s closing price of Bitcoin Spot on Coinbase Exchange: $96,537.
On the weekly chart, Bitcoin has formed a Breakout Mode Pattern (BOM), following a strong bullish breakout from an 8-month Trading Range that had developed over the past year. On the daily chart, a BOM pattern that formed at the top of a trading range has already broken to the downside, activating a Bear Breakout scenario.
Bitcoin
The Weekly chart of Bitcoin ETF
Bitcoin has formed a Breakout Mode Pattern (BOM) on the Weekly Chart. This pattern follows a strong bullish breakout from an 8-month Trading Range, which had been developed the past year. The bull breakout was significant, and the price already reached the measured move target, calculated based on the height of that 8-month range. Once it achieved this target, the price action began to move sideways because of bulls realizing gains, consolidating around the key psychological level of $100,000 on the Bitcoin Spot chart.
As the price moved sideways, it developed into a Breakout Mode Pattern (BOM). A BOM pattern following a bull trend can indicate one of two possible scenarios: it can serve as a bull continuation pattern, where the price eventually resumes the uptrend, or it can act as a bear reversal pattern, signaling the beginning of a downtrend.
At present, Bitcoin is trading near the lower boundary of the BOM pattern. This means that the price is getting closer to key price magnets positioned below, which are likely to influence future movements. The major price magnets include:
- The Weekly Breakout Point of the 8-month Trading Range.
- The Gap between the Bull Breakout Bar and the Follow-Through Bar, specifically the area between the high of the 8-month Trading Range breakout candle and the low of the follow-through candle that confirmed the breakout.
These levels currently act as support zones, meaning buyers are likely to step in, and bears may also take profits (bulls closing hedges), which could provide upward pressure on price.
On the bull side, there are notable technical targets to consider. The first key target is the measured move based on the height of the BOM pattern. Beyond that, the spot price chart presents additional upside targets, including a major measured move projection based on Bitcoin’s 2021 drawdown height, which extends above $120,000. Additionally, the measured move of the BOM pattern on the spot chart points to a potential price level of $130,000.
The nature of a Breakout Mode Pattern (BOM) suggests a theoretical 50% probability that the breakout will occur in either direction—up or down. In other words, this pattern is inherently unpredictable. Since successful trading is about interpreting rather than outright predicting outcomes, traders are adopting a patient approach. The strategy involves either buying at major support levels or entering long positions after a confirmed bullish breakout above the BOM pattern.
On high timeframes, such as the weekly and monthly charts, price action predominantly reflects long-term market activity. Historically, Bitcoin has been an asset that favors a Buy-and-Hold strategy over extended periods. Therefore, bearish activity on these timeframes is in the most part a reflection of bulls managing exposure, either through rebalancing or hedging strategies.
The Daily chart of Bitcoin ETF
In the previous report, we discussed trading opportunities on the daily chart, focusing on a Breakout Mode Pattern (BOM) that had formed at the top of a Trading Range. Such formations at strategic chart locations provide traders with low-risk, high-reward setups, making them particularly significant for decision-making.
A typical BOM pattern presents four key trading strategies, each offering distinct opportunities based on price behavior:
- Bull Breakout.
- Bear Breakout.
- Failed Bear Breakout: This occurs if the price initially breaks below the range but then reclaims the range high, forcing bearish traders to cover their positions. The re-entry point for longs would be the range high, once the failed breakdown is confirmed.
- Failed Bull Breakout: This happens when the price breaks upward but fails to sustain, eventually reversing to the range low. In this scenario, bullish stop-losses get hit, and the re-entry point for shorts would be the range low, after the failed breakout is confirmed.
The target projections for these trades are designed to achieve 2R to 3R returns, meaning traders aim for profits two to three times their risk per trade. These targets align with the upside and downside magnets previously identified in the weekly analysis, ensuring consistency across multiple timeframes.
This week, the Bear Breakout scenario has already triggered, shifting the market’s focus to two remaining possibilities:
- Continuation of the Bear Breakout – If selling pressure remains strong, price will follow through on the downside move.
- Failed Bear Breakout – If price reclaims the range high, this would trap bears, triggering their stop-losses and leading to a sharp move higher.
At this stage, traders are closely monitoring whether the Bear Breakout sustains or fails and reverses.
Please have no hesitation to share your thoughts, insights, and experiences in the comment section below. If you found this report helpful, consider sharing it with fellow traders so we can continue to grow together.
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