Chart analysis of Bitcoin: How will the market unfold?

Written by: Jose Antonio Lanz, Guillermo Jimenez

Compilation is organization: BitpushNews

Bitcoin continues to break through key resistance, standing at a historical high of $116,000. This breakout trend is injecting new momentum into the market, and the upcoming price levels that will be challenged have become a hot topic among traders. This article will analyze it from a technical chart perspective.

Macroeconomic background preparation

As the S&P 500 and Nasdaq Composite Index closed at historic highs for the third time in four trading days, and gold futures reached $3370 per ounce, risk assets are receiving broad buying support as the Federal Reserve maintains a patient stance on monetary policy.

The upward momentum of Bitcoin is also resonating with the explosive U.S. employment data—June non-farm payrolls increased by 147,000 (expected 110,000). Although the strong employment data initially caused Bitcoin to drop below $109,000 due to rate hike concerns, the market quickly absorbed the selling pressure and pushed it to a local new high.

Institutional adoption remains the core driving force. In July, the cumulative inflow of Bitcoin ETFs has surpassed the $50 billion mark. This sustained institutional buying provides crucial support for any pullbacks and validates Bitcoin's evolution from a speculative asset to a portfolio allocation asset.

The synergy between technological breakthroughs and institutional accumulation has led traders to speculate: After overcoming the last hurdle on the road to the unknown, where will Bitcoin go next?

Bitcoin Chart: Double Breakout Aiming for Final Resistance

Bitcoin recently surged to $113,000, marking the beginning of a new historical high range, which is also a decisive technical breakthrough against the two major patterns that had suppressed prices for several weeks.

The 4-hour chart shows that Bitcoin has cleanly broken through a symmetrical triangle pattern, while the daily chart displays smaller fluctuations, indicating slightly insufficient bullish momentum. This is to be expected in this type of pattern, but such a long candlestick leaves little doubt. The breakout confirmation is clear enough to shift almost all key indicators to bullish within the intraday timeframe.

Image source TradingView

On the 4-hour chart, the Average Directional Index (ADX) is at 27. This typically confirms a trending market. ADX measures the strength of a trend, irrespective of direction, and when it breaks above 25, it sends a signal to momentum traders indicating that a sustainable trend is forming, which usually triggers systematic buying in trend-following strategies.

However, the Relative Strength Index (RSI) reaching 75 indicates that Bitcoin has entered the overbought zone. One might consider the RSI as a thermometer for the market—when the reading is too high, it often signals a cooling demand. The current situation may suggest that after a significant rise, an adjustment is imminent. However, it is important to note that Bitcoin has maintained bullish momentum at higher RSI levels multiple times.

The squeeze momentum indicator on the daily chart shows a "close" status, indicating that the recent volatility released from the compressed market aligns with previous analysis expectations. This suggests that the initial breakout has been realized, and traders should prepare for either a continuation of the upward trend or consolidation at current levels.

Overall, the price is releasing bullish signals. Although the probability of the upward trend continuing is high, considering that the pullback candlesticks generally show slight fluctuations, adjustments are not expected to pose a threat to the trend.

The daily chart also shows a bullish structure: Bitcoin has broken free from the descending bearish channel that has suppressed prices since the May highs (marked by the yellow line in the above chart). It currently seems to be forming a bullish support line (the white line in the above chart), referencing the April pullback low and the late June low. If confirmed valid, Bitcoin may oscillate near this support line, maintaining bullish momentum and making $110,000 a new support before the end of the month.

The RSI on the daily chart is reported at 67, indicating healthy momentum without reaching the overbought area above 70—suggesting further upside potential. This reading informs traders that buying pressure remains strong, but has not yet reached the extreme levels that typically signal a correction.

The daily ADX report of 12 indicates that the trend is still developing and has not yet reached a level that can be defined as a clear pattern of dominance—the short-term charts often contain a lot of noise. Although it is below the key threshold of 25 that confirms strong directional movement, low readings following a breakout often signal a calm before acceleration. Traders interpret this as an accumulation phase before the next impulsive upward move.

Moving average analysis shows that Bitcoin is steadily above the 50-period and 200-period Exponential Moving Averages (EMA) across multiple timeframes. The widening gap between these moving averages (known as moving average divergence) typically indicates a strong trend state and acts as dynamic support during pullbacks.

Key Price Level

Immediate support: $110,197 (breakthrough retest level)

Strong support range: $105,000 - $108,700 (support line)

Expected resistance: $115,000 (based on the triangle breakout measured target and Fibonacci extension level)

Bitcoin Market Outlook

The synergy of technological breakthroughs, institutional capital flows, and a favorable macro environment is driving Bitcoin's potential to continue its bullish trend after breaking historical resistance. However, traders who prefer technical analysis should monitor whether the daily ADX can break 25 to confirm trend strength, while also being wary of the RSI divergence phenomenon when a new high fails.

Looking at a broader dimension, July may still see significant fluctuations for Bitcoin: the Trump administration's "Great American Rescue Plan" and other policies could expand the U.S. deficit by $3.3 trillion—historically, this has been favorable for scarce assets like BTC. Additionally, the deadline for the White House's report on the cryptocurrency executive order is approaching on July 22, which may involve updates to the U.S. strategic Bitcoin reserves, becoming a potential catalyst.