Market Overview
Bitcoin: This past Monday marked the close of September and the beginning of a fresh trading month. As we transition into October, traders are reflecting on the monthly and weekly charts, assessing whether the current price action signals the continuation of a bull trend market cycle or a trading range. The monthly price action appears at a crossroads, with many pondering whether the recent strong bull breakout is the start of a sustained bull channel or the start of a bear leg within a range.
Bitcoin
The Monthly chart of Bitcoin
On the monthly chart, traders are debating whether the price action is within a market cycle dominated by a trading range or a tight bull channel. The key reference point is the strong bull breakout that took place after surpassing the previous all-time high in 2021. Since then, prices have retraced into territory that was traded in the past, indicating the potential for continuing within a broad trading range. While breakouts often lead to strong trends, the market has been hesitant to follow through with conviction, leading to several months of sideways action.
This hesitation is evident in the aftermath of a bear reversal bar that followed the bull breakout. Despite its strength, the market has struggled to regain ground above this bear bar, yet it also hasn’t signaled that bears are near control. Instead, the price action suggests that bulls remain resilient, buying at significant levels below $60,000, $55,000, and $50,000. The price has shown attempts to reverse from the prior all-time high, but these efforts haven’t shaken the confidence of bulls, which is essential for the bull case.
The Trader’s Equation still appears favorable for bulls, particularly for those betting on a retest of the all-time high. While buying at current levels may not be as attractive as it was at lower levels, the setup could still work, especially if the market remains in a bull channel and this pullback is merely a temporary pause. With the Always In Long bias in place, bulls should trade cautiously, aware that the market could be at the upper boundary of a trading range. Position sizing should reflect this uncertainty, with traders ready to scale in if prices dip further.
In the long term, historical behavior shows that strong bull breakouts have been dominant on the monthly chart, giving bullish traders confidence that the bull side is easier for structuring trades.
The Weekly chart of Bitcoin
On the weekly chart, the prior report highlighted a bull breakout mode that triggered a long entry. However, this week’s price action (the weekly bar has not yet closed) reveals a lackluster follow-through, casting some doubt based on the bull signal. Bulls placed their stop losses below $49,000, where the breakout pattern originated. Some traders may exit at breakeven or close their positions entirely, while others may opt to trust their original stop loss and hold on to the trade.
This week is critical because it marks the first time since January the market has breached a lower high. This lower high is minor, as it did not lead to a lower low, but it does indicate potential for continued sideways-to-up trading. The three consecutive bull bars seen the previous weeks are encouraging for bulls, as they suggest that momentum was built, even within a trading range. A test of the $70,000 level would fulfill the minimum target for monthly bulls who bought near the August close.
However, it’s still early to conclude whether bulls will prevail or fail. Bears, on the other hand, are showing patience. Those looking to sell at higher levels may be waiting for $70,000, while others might seek to enter at lower levels, particularly near the breakout mode’s stop loss or at the previous higher low. Both approaches represent logical places to place trades, depending on the trader’s bias.
An important observation from the prior report was that the reaction following the activation of the breakout mode pattern would be crucial. Indeed, there was a noticeable selling reaction, particularly visible on the daily chart, indicating that traders have engaged at these levels. This suggests that the $65,050 level is worth watching closely, as it could provide further insights into the balance between bulls and bears.
The Daily chart of Bitcoin
The daily price action offers a clear visualization into how traders are positioning around key levels. The bear reaction that followed the bull close above the triangle trigger confirms that bears had sell limit orders at the level, instead of pending at market bull orders (stop losses). This rejection implies that bulls who entered during September’s tight bull channel may have also taken profits near the recent highs.
Should the price return to $65,000, a bear trade could be structured with a great risk ratio, though the probability of success might be low. In this case, buying a put option could offer an implied good risk management strategy rather than directly shorting with a stop loss above the September high. Additionally, weekly bulls holding on to the breakout mode trade will likely have placed their stop loss around the major higher low on the daily chart, making this level worth monitoring in the coming weeks.
As we move forward, we’d love to hear your observations and insights. How are you managing the current market environment? You are welcome to share your thoughts and strategies in the comments below. If you found this analysis helpful, don’t hesitate to share it with others in the community! Let’s continue building and growing together.
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