Bitcoin’s price has been trading within a broad descending channel for the past two months, showing no clear breakout signals in either direction. Although there was a brief fake breakout from the lower boundary, the market is gaining strength and may be ready to push higher. The Relative Strength Index (RSI) is climbing and is now approaching the 50% level, indicating a shift toward bullish momentum. The midline of the descending channel is the key resistance point that is preventing any significant rally from taking place.
Inverse Head and Shoulders Pattern on the 4-Hour Chart
Examining the 4-hour chart, Bitcoin has repeatedly tested the $60,000 support level in recent weeks. Notably, this price action is forming an inverse head and shoulders pattern, with the neckline situated at $63,500. Should the price break above this level, traders can expect a potential rally towards the $68K resistance level, with the possibility of moving higher in the short term.
However, given the ongoing market conditions and the challenges at the $63,500 level, Bitcoin’s price may face difficulty in breaking above this resistance. There is a possibility that the market will experience further consolidation or even a retracement, testing support levels closer to $55,000 or lower before gaining the necessary momentum for a bullish reversal.
Profit-Taking and Market Stability
Bitcoin has struggled to maintain its earlier upward momentum, experiencing a gradual correction over the last couple of months. While various factors contribute to this slowdown, profit-taking appears to be a primary driver. The Short-Term Holder Spent Output Profit Ratio (STH SOPR) is a key metric used to measure profits realized by short-term holders. Values above one suggest profit-taking, while values below one indicate losses. The STH SOPR has sharply declined during the recent correction, falling from its all-time highs. This suggests that short-term holders have already cashed out their profits. With the STH SOPR now stabilizing around one, it is likely that the weaker hands have exited the market. If there is any opportunity for a new rally to begin, this could be the ideal moment. However, Bitcoin’s price action in the next few weeks will largely determine whether the market can regain its bullish momentum.
