BTC/USD trading analysis - double bottom and ascending wedge breakout
This 4-hour chart for the BTC/USD pair shows a potential bullish breakout based on technical patterns and key support and resistance levels, along with price action analysis. The chart indicates a reversal in trend after a downtrend, with increasing bullish momentum indicators.
Let's review the complete technical analysis, covering chart structure, key levels, price patterns, and trading strategy.
1. Market structure and defined patterns
A. Double bottom reversal - strong bullish signal
A double bottom pattern has formed, which is a bullish reversal signal indicating the end of the downtrend.
This pattern consists of two significant low points (bottom 1 and bottom 2) near the support area of $80,000 - $81,000.
The pattern confirms strong buying interest at this level, preventing further price declines.
A breakout above the resistance level would confirm the validity of the pattern and indicate movement towards higher targets.
B. Formation of the ascending wedge - potential for a bullish breakout
The price is consolidating in the form of an ascending wedge, forming higher highs and higher lows within a tight range.
The ascending wedge often indicates the potential for a breakout.
As this wedge forms after a double bottom, a bullish breakout is expected, not a bearish breakdown.
If the price breaks the upper trend line of the wedge, it will confirm strong bullish momentum.
2. Key support and resistance levels
Support levels:
Key support area ($80,000 - $81,000):
This level has been tested twice, confirming buyer strength.
It serves as the foundation for the double bottom pattern.
This level has been strategically placed for risk management and protection against potential downturns.
Resistance levels:
First resistance area ($95,000 - $100,000):
This is a critical level, where the price has faced multiple rejections.
A breakout above this area would confirm the continuation of a strong bullish trend.
Profit targets:
TP1 (108,481): The first profit target aligns with previous highs and is a logical point for taking partial profits.
TP2 (114,372): This is the second profit target, calculated based on Fibonacci extensions and historical price movements.
3. Trading strategy and execution plan
A. Entry strategy
To execute a successful trade, we need to wait for confirmation of the breakout.
Ideal entry: After a strong breakout above $95,000 - $100,000, indicating bullish momentum.
Confirmation factors:
Increased trading volume → indicates strong buying interest.
Closing the candle above the resistance level confirms the breakout.
Retesting broken resistance as support → reinforces upward continuation.
B. Risk management
Stop loss set: below 72,921, ensuring limited downside risk.
Risk-to-reward ratio: The trading setup aims for a risk-to-reward ratio of 1:3 or better.
C. Potential scenarios
Bullish breakout:
If the Bitcoin price can break and sustain above the $95,000 - $100,000 level, we can expect a rise towards $108,481 (TP1) and $114,372 (TP2).
☑ Bearish rejection:
If BTC fails to break through resistance, it may retest $80,000 or drop below that, invalidating the bullish setup.
4. Final thoughts - what do we expect?
The 4-hour BTC/USD chart analysis provides a setup for a high-probability bullish trade, supported by:
Double bottom formation → strong reversal signal
Potential breakout of the ascending wedge ← momentum
Main resistance breakout levels identified
Conclusion:
If the Bitcoin price exceeds the $95,000 - $100,000 level, we expect significant upward movement towards $108,481 and beyond. However, if resistance holds, we may see a retest of lower support levels. Risk management is essential for trading success.
