Bitcoin’s Breakdown: Bearish Momentum Targets $110,500 After Support Breach – Time to Sell?

Step-by-Step Technical Analysis for Bitcoin (BTC), 2025-08-02

1. Price Action & Candlestick Structure

• Recent Trend: From late May to mid-July, BTC displayed an ascending channel, peaking at $123,091 on July 14. This was followed by a sharp retrace and heightened volatility just above $115,000 – $120,000.
• Short-Term Trend (Last 2 Weeks): BTC failed to retest all-time highs, consolidated, and broke down sharply beginning July 31, moving from $117,831 to as low as $112,045 intraday on August 2.
• Last 24 Hours: The sell-off accelerated, and intraday lows are tightening around $112,200–$112,800, suggesting an attempt to form a base, but continued lower-high prints and lower lows signal bearish momentum.
• Candlestick Patterns: Last several 1-hour candles are showing long lower wicks, suggesting demand at $112,000–$112,300, but no strong reversal or bullish engulfing candle. No evidence yet of an exhaustion gap or V-reversal pattern.

2. Trend Analysis

• Short-Term Moving Averages (SMA/EMA):
  • 10 & 20-period EMAs (estimated, given price sequence) have crossed below 50-period; price is below all short-term moving averages.
  • Slope for both is negative – classic short signal.
• 200-period DMA (Daily, estimated): Lags around $110,000, offering distant support; price is still above this, though the gap is closing.

3. Volume Assessment

• Peak Selling Volume: Last daily bar (August 2) shows a large spike in volume on the move down, confirming the sell-off is supported by liquidity.
• No Clear Capitulation Yet: While high, not extreme enough for flush-out bottom; persistent selling may continue before reversal.

4. Support and Resistance

• Immediate Support Zone: $112,000–$112,300 (intraday base attempts). If broken, $111,000 and $110,000 represent psychological and technical support.
• Overhead Resistance: $113,800 (recent intraday high), then $115,800 (last hourly breakdown zone), then $117,800 (recent swing high).

5. Momentum Indicators (RSI, MACD, Stochastic – estimated)

• RSI (1H/4H, estimated): Likely in the 33-37 range, but not yet oversold (<= 30).
• MACD: Histogram and lines trending sharply negative; gap widening suggests strong bearish impulse, not yet flattening.
• Stochastic: Approaching oversold, but not bottomed; possible for further downward push.

6. Chart Patterns & Formations

• Head-and-Shoulders Top: Formed between July 13 and July 31 ($119k–$118k neckline, $123k head). Breakdown occurred below $117k, validating pattern’s bearish implication.
• Bear Flag / Channel: Intraday action attempts bear flag consolidation from recent drop, but lack of upward rejection so far.

7. Volatility Measures (ATR, Bollinger Bands – inferred)

• ATR (Average True Range): Expanding, confirming disorder and trending conditions.
• Bollinger Bands: Price hugging lower band, no sign of mean reversion yet; riding the band down.

8. Order Book & Market Depth (Inferential)

• No sign of thick buy walls below $112,000, suggesting possible further slippage on breakdown.

9. Sentiment, Overhangs, and Contextual Factors

• Failed Breakout & Rejection: Strong psychological rejection at new all-time highs in July, with persistent post-peak distribution.
• No evidence yet of bear exhaustion (classic reversal candle, volume climax, or strong daily bullish divergences).

10. Synthesis and 24H Price Forecast

• Given all indicators above, BTC is in a confirmed short-term downtrend, with accelerating volume on down moves, failed support retests, and waning demand efforts below $113k.
• Most likely scenario: Further testing and possible break of $112,000 support, with possible extension to $111,000 or even $110,000 before buyers are willing to step in sizeably.
• Upside, if any, likely capped at $113,800–$114,000 for the near term; any rally to that zone will likely face selling pressure.

11. Trade Plan (Risk/Reward)

• Sell/Short Entry: Optimal open price is as close as possible to the breakdown retest zone, i.e., $112,600–$112,800, minimizing risk.
• Profit Target: $110,500 – aligns with strong historical support, 200-DMA proximity, and likely buyer defense.
• Stop: Conservative traders may set stop above $113,800 (recent intraday high) for risk management.

12. Conclusion

• Decision: Declining structure, volume confirmation, and lack of bullish reversal merit a SELL/SHORT POSITION. Entry at $112,600–$112,800 is preferred. Look to cover/close at $110,500 if reached within next 24h, or reassess if reversal signals emerge.

Summary:

• BTC is displaying high-probability further downside, targeting $110,500 support before probable reversal. Watch for capitulation signals and intraday extension risk.