Market Video Report: Bitcoin
Duration 08:57 mins. AI is voicing Josep Capo’s original script.
Summary
Bitcoin is providing actionable structure. The weekly chart is in a clear bear breakout but since the market may be within a broader trading range, this may just be a vacuum test of support.
Transcript
Hi everyone, welcome to this week’s video analysis of Bitcoin’s price action on the weekly and daily charts. My name is Josep Capo, Price Action Trader and author for the Brooks Trading Course website.
Beginning with the weekly chart. We are now in a clear bear-breakout market cycle, though the conviction only became unmistakable last week. Selling a bear breakout that follows a powerful prior bull trend—one that left numerous open micro-gaps to the left—is rarely straightforward. Those unfilled gaps create constant risk of a sudden shift into sideways or even upward action at any moment.
Shorting this move was not comfortable. The overall quality of the bear breakout, taken as a whole, simply lacked conviction for several weeks. This week, however, has been markedly different: we have seen consecutive strong weekly bear bars that finally display consistent momentum.
That improvement notwithstanding, price is now approaching a zone that should be difficult to break to the downside. The primary reason is a large open gap situated between a prior major high and a subsequent major higher low. Such gaps tend to act as powerful magnets and, more importantly here, as support when price revisits them.
Back in early October, as Bitcoin began reversing from its all-time highs, I noted that the market had likely transitioned into a large trading range rather than remaining in a sustained bull trend. At that point we were trading far above the 365-day moving average—a classic location from which, inside trading ranges, it is generally better to sell. Conversely, when price is far below that average, buying becomes the higher-probability play.
This perspective is why I remain skeptical that the current bear breakout will ultimately succeed. I continue to view the broader cycle as a trading range, with the present sell-off representing a vacuum test of the lower boundary of that range. The 365-day moving average is currently flat. Should bears maintain control of weekly closes, it will eventually curve downward. My base-case expectation, however, is that sideways-to-up price action will resume within the next one to three weeks.
Last week I was explicit: I am not selling this bear breakout. Instead, I am prepared to buy should the price reach the green support zone I have highlighted. Executing such a trade in spot or futures carries significant risk—the market can penetrate sufficiently lower to trigger stops before reversing and moving sideways or higher, exactly as anticipated. While I generally prefer structuring breakout trades via spot or derivatives, in setups of this nature I favor options.
With elevated volatility and a major support area immediately ahead, I shift into the role of volatility seller. That role does not require a sharp upward reaction; compression of volatility and stabilization around the green zone are sufficient. The optimal outcome would be a return to the 365-day moving average, which represents fair value and the approximate midpoint of the presumed trading range.
An easy option trade structure in these circumstances is a bull put spread style of strategy: Sell a put with the short strike placed at the green zone and buy a lower-strike put as protection, in case the bear breakout does in fact mark the beginning of a genuine bear trend. Should price simply consolidate sideways, I profit from both time decay and the collapse in implied volatility. I typically enter these positions using contracts with roughly 45 days to expiration and exit at approximately 50% of maximum profit.
To short, I would require a second clear leg higher. That would necessitate an initial rally to test resistance—potentially the $100,000 area, the 365-day moving average, or the zone of trapped bulls near $115,000— and the rally showing weakness or exhaustion. Only under those conditions would I consider re-entering on the short side.
If deciding to trade on the bull side within the presumed range and take a directional long position, bulls would first need to form at least a micro double bottom to provide a second entry signal—either a high-2 or low-2 pattern near the green zone. In either case, protective stops would be distant, realistic targets would be modest scalps, and precise trade management would be essential. This is precisely why I lean toward options in such scenarios: they allow cleaner risk definition and simpler structuring.
Looking ahead to the coming week, we should remain open to any outcome. We could see a sharp downside penetration, or price could rebound to $90,000, $100,000, or beyond. When volatility is high, moves in either direction can be dramatic.
I spent considerable time today discussing concrete trade ideas—an encouraging sign that the market is finally providing actionable structure. More importantly, I hope the broader process was clear: professional traders continually evaluate “if this, then that” scenarios, striving to understand the hand we are dealt and how best to play it. Different traders will interpret the same price action in different ways. Being right or wrong on any individual trade is secondary; what matters is consistently selecting setups that, over the long run, produce a positive trader’s equation.
Before moving to the daily chart, a sincere thank you for following these end-of-day Bitcoin reports, available in written form on the Brooks Trading Course blog every Tuesday, Wednesday, and Friday. We are also actively gauging interest in a dedicated Bitcoin trading room tailored to price-action beginners focused exclusively on cryptocurrency. If that appeals to you, please leave a comment on the YouTube channel or blog—your input is genuinely valued.
Now, let’s dissect the daily chart. We are entrenched in a tight bear channel that constitutes the third leg of a bear trend originating from a classic double top near $115,000.
Last week I pointed out that bulls who entered below the low of the first leg and scaled in $5,000 lower were able to exit the initial position at breakeven and profit on the second. We anticipated others would follow suit. Unfortunately, those who attempted the same this week have been caught out, as price has extended significantly further than most expected.
That extension is meaningful. When a measured move is obvious—whether from a double top or a failed bull breakout—the terminal phase can overshoot dramatically. Exact termination points are uncertain, but the climactic nature of the move is not. Climactic moves characteristically reverse more sharply than measured, proportional legs. The farther price deviates from the original target, the more aggressive the eventual reversal tends to be.
We have not yet reached extreme distance from the measured-move projections, but the move has certainly stretched beyond the rhythm established by prior legs. Consequently, I have marked a broad red zone encompassing trapped bulls from just beneath the prior low all the way down to $5,000 below. Any rally back into that area will encounter supply from those trapped positions, reinforced by the 30-day moving average, creating at least short-term resistance.
Downward momentum remains strong, yet I am not advocating new bear entries at this juncture. When a move appears extended, the disciplined response is often to stand aside and allow continuation if it occurs. The primary issue is not merely reduced probability (strong breakouts can persist even when seemingly late), but deteriorating risk-reward: protective stops become prohibitively wide relative to realistic profit objectives.
Current bears may refrain from adding to positions because risk is excessive; bulls see insufficient probability to justify early entry. Existing bears may take profits or buy back shorts to lock in gains, potentially triggering a pullback at any moment. Committed bulls are likely waiting for at least $80,000 or the weekly support zone. Thus, near-term direction hinges almost entirely on the decisions of the bears currently riding the move.
My expectation: continued downside should encounter increasing support from $80,000 onward. Should a reversal materialize, bulls will almost certainly require a second leg higher to clear $100,000 sustainably, given the layers of resistance below that level and the tendency of initial legs to exhaust in that area.
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