BTC Breakdown After Heavy Selloff: Expect a Relief Bounce Into Resistance, Then Another Leg Lower

Market snapshot (BTC)

• Current price: $78,139
• Context: Sharp selloff over the last ~48–72h. Daily structure shows a major breakdown from the mid-$80Ks into the high-$70Ks, with intraday acceleration and only a weak late bounce.

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1) Multi-timeframe trend & structure (Price Action)

Daily (macro swing)

• From mid-Jan, BTC transitioned from a distribution / topping zone (repeated failures near ~$95–97K) into a bearish leg.
• Key sequence:
  • Lower highs: ~$97K (Jan 14) → ~$95.5K (Jan 15–16 area) → inability to reclaim $90K late Jan.
  • Lower lows: ~$88.3K (Jan 20) → ~$86.6K (Jan 25–26) → $84.6K (Jan 29) → $84.1K (Jan 30) → $78.1K (Jan 31 close/current).
• Conclusion (Daily): Firm downtrend; market is in a “sell rallies” regime until proven otherwise.

Hourly (tactical)

• Clear intraday bear channel / waterfall from ~83–84K into the 76–78K area.
• The bounce into ~$78.1K is occurring after a deep push to ~76.1K (hourly low ~76,093), but:
  • rebound is not impulsive (no strong V-reversal signature)
  • price remains below broken supports (see levels section).

Trend read:

• Primary: Bearish (daily)
• Secondary: Bearish-to-stabilizing (hourly), but still below reclaim levels.

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2) Support/Resistance mapping (horizontal + swing points)

Immediate supports

• $77,100–$76,000: intraday capitulation zone (hourly lows ~76,093). A break below increases odds of continuation to the next daily demand.
• $78,000 (psychological / current pivot): price is “sitting on the ledge”; not a confirmed base.

Overhead resistances (sell zones)

• $79,000–$80,200: first meaningful supply (recent hourly closes clustered; also where breakdown momentum accelerated).
• $81,100–$81,600: prior intraday consolidation before the next leg down.
• $82,600–$83,100: larger broken support band; likely heavy supply if retested.
• $84,100–$84,600: prior daily closes (Jan 30–31 open area); now strong resistance.

Implication: Upside is boxed in by multiple layers of resistance close overhead; this favors short setups on rebounds.

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3) Candlestick & pattern read

Daily candle character

• Latest daily action (Jan 31) resembles a large bearish expansion candle (open ~84,122 → low ~77,020 → close ~78,139), showing:
  • strong supply dominance
  • late bounce, but no recovery of key breakdown levels.

Pattern framing

• Breakdown from a range / topping structure: mid/late Jan failed reclaim attempts near ~$89–90K followed by a decisive breakdown.
• The move into ~$76–78K is consistent with a “panic leg”; these often retrace partially (dead-cat bounce) before continuation.

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4) Momentum (RSI-style reasoning without exact computation)

• Given the magnitude and speed of the last down-leg (84K → 78K with a 76K spike), momentum is likely oversold on lower timeframes.
• Oversold ≠ bullish reversal. In downtrends, oversold conditions typically lead to:
  1. bounce into resistance
  2. failure / lower high
  3. continuation

Momentum takeaway: Expect a rebound attempt, but bias remains bearish unless price reclaims and holds above key resistances.

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5) Volatility / ATR regime

• The last 2–3 daily candles show expanding true range (large daily ranges + heavy volume on selloff days).
• High volatility regimes tend to persist for 1–3 sessions, producing:
  • sharp retracements (tradable bounces)
  • but also renewed flushes (stop-hunts below recent lows)

Volatility takeaway: 24h forward is likely two-sided, but with downside continuation risk still elevated.

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6) Volume analysis

• Notable high volume on selloff days (late Jan and Jan 31) signals distribution / forced selling.
• A durable bottom typically requires:
  • capitulation + strong reclaim candle + follow-through
  • or multi-day basing.
• We have capitulation-like behavior, but no confirmed reclaim/follow-through yet.

Volume takeaway: Supports the “relief rally then fade” playbook.

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7) Moving averages (structural inference)

• With price having fallen from the 90Ks to 78K, BTC is very likely below short/mid MAs (e.g., 20D/50D equivalents).
• In such conditions, moving averages typically become dynamic resistance, aligning with the $82–84K region.

MA takeaway: Reinforces selling rallies into overhead supply.

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8) Fibonacci retracement (from the latest impulse leg)

Using the latest visible impulse down on the hourly scale:

• Swing high area before breakdown acceleration: roughly $84,100
• Swing low: roughly $76,100
• Key retracements:
  • 38.2%: ~$79,150
  • 50%: ~$80,100
  • 61.8%: ~$81,050

These retracement levels overlap tightly with the horizontal resistance zones identified earlier.

Fib takeaway: Highest-probability short entries are typically around 38.2–61.8% retraces in a strong downtrend.

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9) Scenario forecast (next 24 hours)

Base case (higher probability): Relief bounce → lower high → continuation risk

• Price likely attempts to mean-revert toward $79.1K–$81.1K.
• That zone is expected to attract sellers.
• After rejection, BTC may retest $77K–$76K; if that breaks, continuation toward mid-$74Ks becomes plausible.

Alternative (lower probability): Sharp reversal / reclaim

• Requires reclaim and hold above $81.6K, then acceptance above $83K.
• Given current structure, this is less likely within 24h without a catalyst.

24h directional bias: Bearish overall, with a likely bounce first.

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Trade plan (decision + optimal entry)

Decision: Sell (Short Position)

Rationale: dominant downtrend + heavy overhead resistance + volatility regime suggests better R:R selling a bounce rather than buying into a falling market.

Optimal open price (entry)

• Preferred short entry is where resistance and Fib cluster:
  • Open (Sell) at: $80,100 This is near the 50% retrace of the $84.1K → $76.1K impulse and inside the first major supply zone. If price never bounces there, the trade is skipped (discipline > forcing entries).

Take-profit (close price)

• Primary target: retest of capitulation zone:
  • Close (Take Profit) at: $76,300 This is just above the ~$76.1K low to improve fill probability.

(Risk note for completeness: a logical invalidation would be sustained acceptance above ~$81.6K–$83K; you did not request a stop price, so I’m not setting one in the outputs.)