This week saw little movement in most assets, except for bitcoin, which jumped over 9% in just two days. The rise didn’t have a clear reason, but common explanations like ETF inflows and expected Federal Reserve rate cuts were mentioned. The increase seems to be driven by technical factors, with momentum rising after breaking through a previous high, much like a short squeeze. Coinglass data shows over $1 billion in liquidations during this rally, meaning many short sellers were forced to close their positions. Due to existing fiscal and monetary policies, bitcoin’s price moved upwards. The breakout from a bullish pattern suggests it may reach new highs before the US CPI release. If the CPI is strong, we might see a correction, as expectations around interest rates could shift. But if the figures are softer, the rally might continue. On the daily chart, the breakout from a bullish flag points to a technical target of about $135,000, while a more cautious estimate is $125,000. The 4-hour chart shows a new upward trendline that supports the bullish trend. The recent parabolic nature of the rally on the 1-hour chart signals caution, yet dip-buyers are looking at support near $114,000. Buyers and sellers will likely keep an eye on the trendlines around $110,000 for future direction. In summary, bitcoin’s price has surged not because of major policy changes or shocks, but due to chart-driven traders responding to market conditions. This unexpected movement caught many off-guard, especially those trying to profit from falling prices. Data shows a significant amount of liquidations, meaning traders were forced out of their short positions. Such activity often leads to even greater price movements. Our analysis is clear: the price break above a previous ceiling on the charts led to automated buying and pushed out bearish positions, which is typical when speculation is high. Once certain levels were crossed, algorithms and momentum funds joined in, adding momentum. While some traders are still focused on broader economic concerns like inflation and expected Federal Reserve rates, these factors have been in play for months and aren’t new. Currently, the daily flag breakout suggests traders might be aiming for prices as high as $135,000. However, we believe that short-term momentum could run into exhaustion due to the steep price increases. On the hourly chart, the nearly vertical rise often leads to quick corrections. While long-term indicators suggest a bullish trend, we’re monitoring if the price can hold around $114,000 if it drops. The minor trendline close to $110,000 could give a clearer signal. If sellers break through this line, the assumption of continuing the trend might waver. Until then, many traders may view dips as buying opportunities instead of warnings. However, staying alert is essential. Complacency can be risky, especially if expectations around rate cuts change due to new inflation data. While we’re relying on charts without new macro news, we shouldn’t overlook the broader context. If inflation data is stronger than expected, the rally could lose momentum quickly. In contrast, if the data is weaker, it may strengthen the resolve of current long holders. In either case, risk management is crucial for traders, especially those using leverage. Once prices move this quickly, maintaining stability becomes challenging.

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