BTC Ready for $120K Breakout after Cooling Period Ends

The key take-aways

• Bitcoin fell below the $113,000 mark as leverage usage cooled, and speculations bets increased. This created room for volatility to rise.

• 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 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.

These cooling phases often have a positive impact on the uptrend. 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. 

There are less overcrowded positions this time around, which could reduce the likelihood 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

Bitcoin reaches $120,000 after key breakout pattern appears

Bitcoin’s four-hour chart shows a bullish head-and shoulder pattern, its neckline, and the major resistance level at $113.650. If this breakout is confirmed, it could open up key liquidity pockets and pave the way to a 5.5% rally towards $120,000. 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 signals have already turned supportive. The relative strength (RSI), which is often used to indicate the change from neutral conditions into bullish ones, has stabilised above 50. 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. Risk is inherent in every investment decision and trade. The reader should always do research prior to making a final decision.