Bitcoin's Breakout Fizzles: Is a Major Reversal in Play...?Bitcoin Technical Analysis – In-Depth Breakdown
Over the past two months, Bitcoin has exhibited a strong bullish trend, appreciating by approximately 51%. The sustained rally was primarily driven by bullish momentum, increased investor confidence, and broader market sentiment.
Recently, Bitcoin broke through its all-time high (ATH) of 106,500, surging to a new peak near 112,000. However, this breakout was short-lived as the price failed to sustain above this level, indicating significant profit-taking activity by traders and long-term holders. This inability to hold the ATH region highlights a potential liquidity pocket where sell orders accumulate, resulting in a rejection wick and a subsequent reversal.
From a Technical perspective:
The price has now fallen back below 106,500, turning this key level into a major resistance zone. Historically, once a strong resistance level (like an ATH) is breached and subsequently reclaimed, it often acts as a formidable barrier to upward price movement unless there’s renewed bullish momentum.
Additionally, Bitcoin has broken its ascending trendline (drawn from the lows of the uptrend) and has already retested this trendline from below. The retest was successful in confirming the breakdown, which further strengthens the bearish bias.
The price structure is now forming a potential lower high pattern near the 106,500 resistance. This could signal a shift in market sentiment from bullish continuation to consolidation or correction.
In terms of market psychology, the all-time high region represents a crucial psychological barrier. Traders and investors often exhibit heightened caution near such levels. Many choose to lock in profits due to fear of a double top or a false breakout. This behavior can create increased volatility, especially when combined with institutional and retail order flows.
Trading Strategy and Risk Management
Given the technical breakdown and the psychological factors at play:
✅ A short position can be considered, particularly around the 106,500 resistance, with confirmation from the trendline retest.
✅ However, exercise caution due to the high volatility typically observed near ATH levels. Whipsaws and fakeouts are common as both bulls and bears battle for control.
✅ Avoid high-leverage positions unless you have a strict stop-loss in place. Ideally, place the stop-loss just above the 106,500 - 107,000 zone, where a decisive breakout would invalidate the short setup.
✅ For profit targets, initial supports are seen around 100,000 - 98,000, and a deeper correction could test the 94,000 - 92,000 zone.
✅ Wait for clear confirmation, such as a strong bearish candle on the retest of the resistance, before entering the trade.
