Discover the Cryptic Bitcoin Dance: Breakout, Retest, and More Drama!

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What to know:

  • BTC price slide looks like it’s been reading from the Book of Classic Breakout and Retest Patterns, probably near the front, where the best illustrations are! 📉
  • A similar pattern performed a starring role in BTC’s plotline in mid-2020, notably alongside the less thrilling Japanese 10-year bond yields. Who wouldn’t want to be that exciting? 🎢

Think back to your last jaunt away from the daily grind—lock the door, right? But just as you’re about to leap into your chariot, you pivot like a well-trained dance partner to ensure the lock is secure, as if the universe were sending a meteor to test your memory. 🏡💨

Welcome to the financial markets, where human emotions rule the throne (and it’s a very bumpy ride indeed). Much like your vacation preparations, after breaking through a long-held resistance—e.g., the dreaded ‘unable-to-book-a-hotel’ phase—assets often return to reassure themselves that the breakout was valid, you know, just in case it was all a drunken dream. 🔑 ⏳

This delightful “breakout and retest” spectacle is as well known as the accidental spilling of coffee on your new shirt. Bitcoin‘s current panic sell-off? Just a healthy dip back to check if the previous high of $73,835—breached in November like a particularly bold bull at a rodeo—still holds water. 🐂🚀

To put it plainly, downward momentum might just reach a fiddling halt around these levels, like a breathless athlete at the starting line, poised for a potential sprint upwards.

BTC has taken a nosedive of over 15% this month, tumbling under the $80,000 mark. It is exposing the earlier resistance-turned-support—$73,835—as if to say, “Are you still there, buddy?” Prices broke above this level back in early November, just after we all found out that pro-crypto Donald Trump was still a player on the board. 🏛️💰

Markets love to retrace their steps like a confused tourist looking for a bathroom sign, and that tendency is steeped in the great behavioral soup that is investing. 🍜

Humans, by their nature, are averse to risks when sitting in the glow of profit-fueled euphoria. So, in a fit of decency, they swiftly book those profits instead of letting them run wild like a pack of mildly aggressive wolverines. The so-called ‘prospect theory’ explains why those post-breakout rallies tend to end faster than a cat fleeing from a bathtub. 😺🚿 BTC holders have been slicing their profits at around the $100K mark since December, like carefully cutting slices of a metaphorical cake. 🎂

Now, as prices tumble back towards that breakout point—specifically the $73,835 level—those with a fear of missing out leap in like it’s the last bus of the night, attempting to ensure that the level holds firm. The subsequent bounce from the former resistance-turned-support lures more buyers, potentially creating a rally of epic proportions.📈✨

That very scenario played out in the thrilling episodes of Q3 2023 and August-September 2020. 🕰️

On both occasions, the breakout and retest led to sky-high rallies, but hold your unicorns! Traders must remember that a failed retest or the absence of a meaningful bounce means something is lurking in the shadows—a potential downtrend ready to rear its ugly head like your Aunt Agatha at the family reunion. 🦄👻

Throughout the years, I have witnessed countless renditions of breakout/breakdown retests leading to grand moves in the nostalgic corridors of traditional markets.

Consider the yield on the 10-year Japanese government bond. It ignited a double-bottom breakout in January 2024, making a point to revisit that breakout level countless times before shooting up to reach multi-year highs. Surely, they’ve got some fantastic snacks at that party! 🎉📊

Meanwhile, the AUD/USD pair took a dramatic plunge out of major support last December as if it had seen a ghost. The pair attempted a bounce to the trendline resistance only to succumb to sharper losses this week—ghosted once again! 👻💸

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2025-02-28 10:16