Bitcoin (BTC) Hits $121,000: Is a Short-Term Reversal Coming?

After breaking out of a descending channel the Bitcoin price has just kept going, reaching as far as $121,000 before a trendline rejection. Is Bitcoin about to retrace to the top of the descending channel before a definitive surge that takes out the $124,000 all-time high? A reversal back to the top of the ascending channel? Source: TradingView The short-term chart for $BTC shows that the price is currently being rejected from the bottom of a narrow ascending channel that had contained the price previously. While there is the possibility that the price could just bounce from the $119,450 support level and then keep rising, the $BTC price is very overbought in the short-term time frames, and even out to the daily time frame. It would make sense for the bears to turn the rejection into a reversal. This downward impulse would then likely take the price back to the top of the big descending channel in order to test and confirm the breakout - a perfectly normal and healthy thing to do. Once the confirmation is made, and the price does not get sucked back into the channel, the real upside surge could begin, as illustrated by the possible trajectory of the green arrow. At the bottom of the chart, the 4-hour Stochastic RSI indicator has started its journey back to the bottom. The 8-hour and 12-hour indicators should start to follow. The 0.382 Fibonacci level - good zone for a bounce? Source: TradingView The daily time frame viewed with the Fibonacci extension lines illustrates likely levels for a bounce. The $BTC price is coming back down to the most shallow of these levels now, which is the 0.236. A healthier retrace would be to the 0.382, which would be likely to coincide with the top of the descending channel. That said, a bounce from the 0.382 Fibonacci level would be very bullish. A fuller retracement to the 0.618 is not as likely, given that this would mean the price going back into the channel, and a possible lower low being set. At the bottom of the chart, the RSI indicator can be seen to be coming back to the descending trendline. If it does so, and bounces from there, this would likely match the price action above. Entire bull market to date holds parabolic curve Source: TradingView The 2-week chart shows that the $BTC price has already got above the previous 2-weekly candle body tops. It also reveals that the whole of this Bitcoin bull market is holding nicely above a parabolic curve. Only once did the price dip below, and this was at the extreme bottom of the March 2025 31% reversal. Towards the bottom of the chart, the Stochastic RSI indicators very much look as though they will confirm a cross-up at the end of this week, which would be a hugely bullish event. At the bottom of the chart, the RSI indicator is once more pushing up against the downtrend line. If it breaks through, this could coincide with a surge in the price action. Just one note of concern - bearish divergence has been building since February 2024. In order to annul this, the Stochastic RSI indicators need to hit the top of their range, and the RSI indicator needs to get to the 88.00 level, surpassing the previous high. Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.