Bitcoin may revisit $114K to fill the gap before it confirms the inverse head and shoulders pattern.
The neckline at $120K is the key level that could trigger either a breakout or a false trap.
BTC could see higher targets near $132K if momentum builds after holding above the neckline zone.
Bitcoin (BTC) is trading near $117,858, approaching the neckline of an inverse head and shoulders (H&S) pattern on the daily chart. A potential pullback to the $114,000 region may follow, possibly filling the CME gap left behind during recent bullish moves. Traders are watching this level closely as a reaction could decide the strength of the breakout.
https://twitter.com/CryptoAnup/status/1946761972806218207 Inverse Head and Shoulders Sets the Stage
The chart shared by analyst Anup Dhungana identifies a clear inverse H&S pattern, one of the strongest reversal signals in technical analysis. The pattern is formed by three price troughs, with the middle being the lowest and the two outside troughs forming the shoulders. This structure suggests a reversal from the previous downtrend and typically signals bullish continuation after a breakout.
On this chart, the neckline—currently located just under $120,000—acts as a decisive resistance level. Bitcoin is now testing this trendline after forming the right shoulder over the past several weeks. A clean break above this neckline would technically validate the pattern and could open the path toward higher targets.
However, the chart also indicates a possible "short squeeze trap zone" above this neckline. If Bitcoin fails to hold this breakout and falls back below, this zone may trap overleveraged long positions. The resulting liquidation cascade could trigger a sharp move down to fill the CME gap at $114,000.
CME Gap and Trap Risk
CME gaps occur when Bitcoin's price changes significantly between Friday's close and Monday's open in traditional markets. Traders often view these gaps as magnetic levels that the price may revisit before continuing its trend. In this case, the visible gap lies near $114,000, coinciding with the potential neckline retest.
The chart suggests that a pullback to this region would not invalidate the inverse H&S structure. Rather, it would present a classic retest before a stronger move higher. Traders may anticipate this drop as a healthy correction within the broader bullish framework.
The trap zone around $120,000 presents a critical short-term risk. If bulls fail to sustain momentum above this area, the reversal could be steep. With open interest growing in derivatives markets, even a minor liquidation could lead to exaggerated downside pressure.
Despite the risks, the broader chart structure continues to support the bullish outlook. The formation spans several months, giving it stronger weight than shorter patterns. Traders may wait for confirmation before entering long or short positions, especially as the price nears key psychological levels.
Breakout or Bull Trap?
The question remains: Will Bitcoin confirm the breakout or fall into a short squeeze trap around the $120,000 mark? The weekly close above the multi-year trendline is critical for long-term direction. If BTC closes above it, bullish momentum may accelerate quickly. Conversely, a rejection could delay further upside and lead to extended consolidation.
Analysts remain focused on the neckline as the pivot point. A strong push above this level could lead BTC toward the upper channel resistance near $132,000. But if the neckline fails, Bitcoin may drop sharply toward $114,000 to close the CME gap. With volume increasing and sentiment turning bullish, the market’s next move may define the trend for the remainder of 2025.
