BTC Ready for $120K Breakout after Cooling Period Ends

The key take-aways

• Bitcoin dropped below $113,000 as speculative and leveraged bets cooled. There was more room to move up in price.

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

Bitcoin’s (BTCRecent prolonged consolidation below $113,000 forced traders to reduce risk. However, this cautious approach could set the stage for a 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 The futures data indicates that traders are not betting as aggressively on either side. The Integrated Market Index (IMI), which was weighed by constant 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 the sellers have control.

Historically, this cooling phase has often been the catalyst for stronger uptrends. Bitcoin appears to have formed a new base, similar to what happened in Q2, where prices rallied from $74,000 after settling at $80,000. 

There are less long positions that have been oversold, which could reduce the risks of forced 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

Bitcoin reaches $120,000 after key breakout pattern appears

Bitcoin has formed a head-and shoulders pattern with a major resistance at $113.650. The neckline is also set to this level. This level is a key test for liquidity, and a confirmed break above it will open the door to an almost 5.5% rise towards the $120,000 area. The first bullish structure break on the daily chart will be the close of the day above $113.650, indicating that the trend is shifting. 

Momentum indicators are now supportive. The relative Strength Index (RSI) is now above 50. This threshold often signals the shift from neutral to bullish. The fact that this level is maintained suggests the buyers are taking control of the market, reducing short-term pressure.

Bitcoin’s exponential moving averages are clustered near the current level, adding to its bullish background. The moving averages will become strong supports if the price closes over these indicators. This would reinforce the bullish structure.

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.