Bitcoin Retests Breakdown Level After Head-and-Shoulders Formation, Bearish Outlook Still Intact
Bitcoin is showing signs of technical weakness despite recovering from an overnight dip. While the broader market narrative remains constructive, near-term price action suggests that the leading cryptocurrency could face renewed downside pressure.
As of Friday, BTC has rebounded to approximately $104,000, climbing from its early low of $104.30 in tandem with gains in U.S. equity futures. However, technical indicators point to a potentially bearish setup still in play.
Breakdown, Retest, and What Comes Next
A review of the hourly chart reveals that Bitcoin broke down from a head-and-shoulders (H&S) pattern on Thursday, marking a short-term shift from bullish to bearish bias. The recent bounce appears to be a textbook retest of the neckline—a common occurrence after such patterns complete.
This type of price behavior aligns with behavioral finance theory: initial short sellers often book profits after the breakdown, creating a temporary bounce. However, traders who missed the initial move typically enter short positions at the neckline, reinforcing resistance and setting the stage for a second wave lower.
Key Levels to Watch
- Immediate resistance: ~$104,000–$104,500 (neckline retest zone)
- Bearish target: ~$95,500, calculated by subtracting the height of the H&S pattern from the breakdown level
- Near-term support: $100,000 psychological level
- Bullish invalidation: A decisive break above $107,000 would negate the bearish pattern and refocus attention on all-time highs
Bottom Line
While the macro backdrop and long-term trajectory for Bitcoin remain favorable, the current technical setup favors caution. The bounce to $104K may prove short-lived unless bulls reclaim momentum above $107K.
Until then, the risk of a deeper retracement remains on the table.
