Market Video Report: Bitcoin
Duration 9:41 mins.
Summary
Bitcoin has failed its bull breakout from the cup and handle pattern. After the market found no follow-through above the handle, the bears took control, making a test of the trading range lows the highest probability outcome. On the daily chart, this bear breakout is likely to reach its measured move target.
Transcript
Hi everyone, welcome back to this week’s Bitcoin price action analysis. My name is Josep Capo, and I’m a 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 weekly and daily charts.
To understand where we are, we have to look back at the market structure from November 2025. During that time, the price initiated a bear breakout followed by a tight bear channel. As we have discussed since then, many bulls were trapped in that move. When you have trapped traders, it inevitably adds significant selling pressure on any subsequent move back up, as those traders look to exit their positions.
Fast forward to this past week: we discussed the market’s attempt at a bull breakout from a cup and handle pattern. This was a clear effort by the bulls to reverse the trend after a prolonged period of consolidation and trading range activity.
Mathematically, the probability of a major trend reversal like that succeeding is typically around 40%. This represented a 2-to-1 reward-to-risk ratio based on the size of the handle—remembering, of course, that the stop loss for the pattern was positioned just below the low of the handle.
Even at a 40% win rate, that setup offered a positive “trader’s equation” because of the high reward. There was also a 60% chance of the market reaching a 1-to-1 target based on the handle size; however, as we can see now, the market failed to sustain that momentum. Interestingly, that 2-to-1 target I mentioned also happened to align with the 1-to-1 measured move target of the entire cup and handle structure.
The Anatomy of the Failure
As you can see on the charts, the breakout failed. I previously noted that if the price traded below the $94,000 to $93,000 zone, it would be a major red flag for the bulls. For a breakout to be valid, the subsequent pullback—plus the follow-through—needs to hold above the breakout point of the handle.
Sunday gave us a strong bear bar, but it was Monday’s bearish follow-through that definitively signaled something was wrong. What followed was a massive bear breakout, which has now transitioned into sideways action.
I’ve mentioned before that if the bulls failed to hold this level, I would be inclined to look for short opportunities. Now, before we go any further, please remember that this is my personal market view—this is not a trading recommendation or financial advice.
In my view, we are now highly likely to test the prior higher lows, and potentially even the lower low. This could lead us toward the $75,000 area, which we will examine more closely on the weekly chart.
Understanding Market Mechanics
Why does a failed breakout move so aggressively in the opposite direction? It comes down to market mechanics.
A cup and handle is essentially just a representation of a trading range, much like a double top, a triple bottom, or a triangle. When a breakout of a trading range fails, it becomes a prime opportunity because you can expect the price to attempt to reach the other side of that range.
The market did not find enough participants willing to pay higher prices above the cup and handle pattern. Therefore, it is now seeking to “check the other side.” Trading ranges represent areas of consensus—where most participants are willing to engage. If the price breaks out and then immediately returns to the range, it suggests the move was exhausted. With nothing holding the price up, it will fall until it reaches a level where a consensus of participants wants to buy back in.
Is this a 100% certainty? No. We should never assume anything is guaranteed in trading. However, this is certainly an exploitable pattern. I believe the high of Thursday’s inside bar offered a solid entry for a trade that should deliver, at the very least, a downside scalp. On the daily chart, a scalp is roughly $2,000, which would lead the price toward $88,000.
Beyond that, I believe there is a 60% chance the price completes a measured move down based on the size of the bull breakout leg that originally broke the cup and handle. This makes sense technically because such a move would test the previous lows, which is exactly what we expect after a failed breakout.
The Long-Term View: The Weekly Chart
Let’s shift our perspective to the weekly chart. I’m pointing to the $75,000 area for a very specific reason: it is the breakout point of the 2024 trading range.
2024 was a pivotal year for Bitcoin because it marked the entry of major institutional players through ETFs like the IBIT. Bitcoin is now managed by funds and money managers across the globe, making this $75,000 level a massive zone of institutional support.
While the price could potentially penetrate lower toward the apex of that range at $60,000, I think that would be the absolute floor. Interestingly, $60,000 represents a 50% retracement from the all-time highs. Before the ETF era, 80% drawdowns were common. Now, I believe drawdowns will likely be contained within 60%, as volatility continues to reduce over time.
If I am selling this move, my target is that $75,000 breakout point. That area left an open gap. When the price trades back through these gaps, it generally does one of two things: it either breaks through sharply or reverses sharply. I am leaning toward a reversal at that level. Why? Because the downside is fundamentally limited. We are in a major trading range, and the golden rule of trading ranges is to buy low and sell high.
To me, $75,000 looks like the “low” of the current environment. Reaching that level would also constitute a second leg down within a trading range—and as many price action traders know, fading a second leg is a high-probability setup.
Thank you for watching this video! If you found this analysis helpful, please do not forget to like the video and subscribe to the channel for more updates.
I’d also love to hear your perspective on this failed breakout, so please post your comment in the comments section below and let’s get a discussion going. I’ll be looking forward to hearing your thoughts.
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