Market Overview: Bitcoin
Bitcoin reached a major measured move target on the monthly chart in July, while establishing a new all-time high.
Bitcoin
The Monthly chart of Bitcoin
Bull Channel Formation
Bitcoin experienced a sharp bull spike in late 2023 through early 2024, which was followed by the formation of a bull channel—a sloping upward trend where prices make higher highs and higher lows. The price remains within this channel today. During the second leg of the pullback after the spike, an open gap formed between the spike’s high and the subsequent pullback low. The low of that pullback evolved into a Major Higher Low (MHL) following July’s higher high.
Wedge Top Pattern
The recent price action has formed a wedge top after three upward legs. Wedge tops typically lead to at least two legs sideways to down as the momentum wanes. However, in a strong bull channel like this, the first wedge top often fails to reverse the trend fully, allowing for possible continuation upward.
Channel Strength Assessment
Is this a truly strong bull channel? The presence of an open gap between the initial spike high and the current MHL strengthens the bullish thesis.
Current Price Testing
Currently, Bitcoin is testing the previous higher high, which is now a breakout point, along with a higher monthly close near the psychologically significant $100,000 round number. Analysis of lower timeframes (like daily or weekly) suggests this testing phase could extend into August or early September.
Bull Scenario
Bulls are aiming for a strong reversal bar or pattern from the $100,000–$105,000 zone, ideally leaving the body gap (the unfilled space between candlestick closes) open. This may set up another leg higher in the channel.
Resistance Warning
However, the current area is at key resistance: Projecting the height of the 2022 drawdown upward from the breakout point targets $120,000–$123,000 as a potential ceiling where sellers might dominate.
July Bar Details
July closed as a bull bar above June’s close, showing buying pressure, but it had a big upper tail—indicating profit-taking by bulls at the measured move target. This bar also formed a 3-bull micro channel.
Breakout Quality Evaluation
- The fact that this is the third leg up reduces the probability of a symmetrical (equal-length) leg higher, as trends tend to weaken as they mature.
- Most bars in the sequence show upper tails (selling at highs) and not all close above prior highs; one is a doji (indecision candle with small body), signaling mixed conviction.
Overall Outlook
The trend might persist as a small pullback bull trend, but it’s not particularly bullish for the remainder of Q3 2025. Being at resistance lowers the odds of a symmetrical leg up. The best outcome for bulls is holding above $100,000, which has good probabilistic chances based on historical patterns. If support fails, expect a test of the 365-day moving average, potentially leading into a broader trading range.
The Weekly chart of Bitcoin
Context and Transition
Bitcoin spent about 8 months in a wide trading range during 2024 before breaking out upward and completing a measured move (equal to the range height). Early 2025 saw a double-top formation (two highs at similar levels), followed by a strong bear surprise bar that initially shifted bias to “always in short” for a potential second leg down or sideways. However, bears failed to capitalize due to several factors:
- The surprise bar had a big lower tail, suggesting selling exhaustion as buyers stepped in at lows.
- Price re-entered the double-top area, closing the breakout gap and neutralizing the bearish breakout.
- Bears never fully gained control, with no sustained follow-through selling.
- The 12-month moving average overlapped with the 2024 breakout level, acting as strong support.
Shift Back to Long Bias
In Q1 2025, a 30% drop from Q4 2024 highs triggered institutional buying interest. This formed a High-3 reversal pattern (three higher lows after a selloff). A strong bull bar then closed above the 3-month moving average, flipping the bias to “always in long.” The drawdown was fully recovered, leading into a bull micro-channel (tight upward sequence) and a cup-and-handle pattern (a rounded bottom with a handle pullback, bullish continuation). Rallies that flip from short to bull bias often have an edge, and the first pullbacks in such setups rarely reverse the new trend. After a tight sideways-to-down pause, a High-2 buy signal (second higher low) emerged two weeks ago.
High-2 Mechanics
The High-2 was a legitimate entry point for longs, though follow-through was weak—bulls managed to hold against Q2 sellers but didn’t surge aggressively. A stronger entry for bulls would have been buying above the all-time high. Bulls targeted a $120,000 breakout level, which was achieved. Profit-taking was expected in the $120,000–$123,000 zone, aligning with the monthly measured move resistance.
Bad Follow-Through Implications
The profit-taking has resulted in bad follow-through (lack of sustained momentum after the breakout), which undermined the upward push, lowered the odds of reaching the cup-and-handle measured move target, and increased the likelihood of a deeper pullback.
Current Pullback Dynamics
Last week, price traded below the prior week’s low but closed as a bull bar. This week, it hasn’t exceeded the prior high and is trading below the prior low—marking two consecutive lower highs and lows, with no trade above the prior high. This indicates a bear trend on lower time frames, suggesting short-term selling pressure.
Broad Bull Channel Perspective
The ongoing pullback is drawing the upper trend line of the broad bull channel. Copying this channel down to the MHL fits well with the prior major higher low, showing the channel has been respected so far. Bulls typically buy pullbacks in such channels. The overall behavior resembles a trading range with occasional bull spikes, which often closes gaps eventually. There’s a realistic chance of testing the MHL in this pullback.
Key Supports
The MHL sits below the 50% retracement of the broad bull channel, making it a strong buy area for bulls, especially with confluence at the $100,000 level (round number support).
What If Bulls Reverse Upward?
If price reverses up from here, leaving the breakout point and body gaps open without filling them, it would confirm no denial of the bull trend—indicating a small pullback bull trend that remains bullish until key gaps close.
Conclusion
Market sentiment has shifted from bullish last week to neutral now—neither strongly bearish nor bullish. Shorter-term bias is bearish, with probable continuation in the coming sessions. On higher time frames, bulls face no easy path over the next 10 weeks. Bears have better odds of reaching $100,000 support than bulls have of hitting new all-time highs.
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