BTC is primed for a $120k Breakout Once Cooling Phase ends

The key takeaways

• Bitcoin fell below the $113,000 mark as leverage usage slowed and speculation bets were reduced, which created room for volatility.

• BTC could reach $120,000 if BTC breaks above $113.650. This would confirm the inverse head and shoulders pattern.

Bitcoin’s (BTCThe recent extended consolidation of the market below $113,000 has caused traders to take a more cautious stance, which could pave the way for the next breakout. Leverage and speculative positions are cooling. This market looks ready for a sudden upward swing, possibly reclaiming the $120,000.

Data indicates that Bitcoin price momentum has improved slightly, rising from −8% to −5% over the past week. The bearish trend has weakened, but sellers are still slightly in the lead. This could indicate that the market is nearing its end. “repair zone.” 

Bitcoin researcher Axel Adler Jr. noted Futures data shows that traders have taken a backseat and are not betting as aggressively. The Integrated Market Index (IMI), which was weighed down due to persistent selling, is now stabilizing at 45-50. 

The open interest rate has decreased, which indicates a reduction in leverage as well as a move to defensive positions. The market is now in a phase of balance, where neither the buyers nor sellers have control.

In the past, cooling periods have set up stronger upward trends. Bitcoin appears to have formed a new base, similar to what happened in Q2 of this year’s halving. Prices had dipped below $74,000 at the bottom and rallied up from there. 

This time, the silver lining could be that there is less overcrowded long position. That would reduce the risk of liquidations. This creates room for volatility on the upside to appear once demand is restored, possibly accelerating Bitcoin’s return towards new highs. 

Related: Bitcoin taps $113K as analysis sees ‘return to highs’ on Fed rate cut

Bitcoins to reach $120,000 when key breakout patterns form

Bitcoin has formed a head-and shoulders pattern with a major resistance at $113.650. The neckline is also set to this level. If this breakout is confirmed, it could open up key liquidity pockets and pave the way to a 5.5% rally towards $120,000. If the price closes above $113.650 on a daily basis, it will mark the first bullish breakdown of structure in the Q3 chart. This indicates a significant trend change. 

Momentum indicators are now supportive. The relative Strength Index (RSI) is now above 50. This threshold often signals the shift from neutral to bullish. This level indicates that buyers have regained control and are dampening short-term selling pressure.

Bitcoin has a bullish outlook, as the exponential moving (EMA) averages of 50, 100, and 200 days are all clustering at current levels. Moving averages can become strong support if price closes higher than these indicators.

Related: Bitcoin long-term holders offload 241,000 BTC: Is sub-$100K BTC next?

This article contains no investment recommendations or advice. Each investment or trading decision involves some risk. Readers should do their own research before making any decisions.