Market Overview: Bitcoin
This week, Bitcoin continued testing downward as we approach the final week of August, the last trading days of the month. August is currently a doji on the monthly chart, sitting near July’s close. The price briefly traded above July’s high but failed to hold, rejecting higher levels. With a pair of dojis—July and August—both bull bars with prominent tails at the top, a pullback toward the $100,000 big round number looks reasonable.
Bitcoin
The Weekly chart of Bitcoin
The weekly chart shows a recent bull breakout from a Cup and Handle pattern, a reliable continuation setup after a strong bull trend. The breakout bar from the handle was robust, signaling strong buying pressure, but the follow-through was a bear bar—a warning for bulls expecting consecutive bull bars to confirm strength. Caution was warranted.
A couple of weeks ago, the price tested the breakout point (handle high) and reversed upward. Bulls need new highs to sustain the trend, and holding above key breakout levels is critical. The Body Gap, between the previous higher high and recent higher low, must remain open to support the small pullback bull trend. This is the second reversal attempt; strong trends typically withstand at least four before failing. Betting with the trend remains prudent for small profits.
- High 2 Bull Signal: Valid entry above handle high, stops at handle low. Target 2:1 reward (~$140,000, 40% probability). Scaled out half at 1:1 after no follow-through. Stops raised to August low, running free trade until body gap closure or breakout to $135,000-$140,000.
- Bear Case: Need to close Body Gap, then target trend line low. Low 2 sell signal triggered, testing handle breakout and 90-day moving average (past quarter’s average daily price). Weak follow-through, reversed from support.
Selling the Low 2 without a closed Body Gap was risky; The open Body Gap keeps the bull trend alive, but more sideways bars weaken the bull thesis. The monthly close will be key—bull or bear, and its distance from July’s close.
The Daily chart of Bitcoin
The daily chart is in a trading range with four legs: a double top and a double bottom. After four legs, the odds of a successful breakout increase, or breakout failure odds decrease. The trading range formation as a price action structure is complete, entering breakout mode.
- Breakout Odds: First breakout has 50% success rate. Viable if risk-reward ratio yields positive trader’s equation (reward > risk long-term).
- Key Levels: Watch big round numbers ($100,000, $110,000, $120,000) and areas of agreement between prior and current trading ranges, typically around the range’s apex.
Avoid fading breakouts; wait for a stop order setup, which could lead to a strong swing trade. The monthly suggests a pullback, the weekly shows a bull trend under pressure but intact with an open Body Gap, and the daily is primed for a breakout post-range completion.
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