Bitcoin Exhibits Inverted Head and Shoulders Formation Above $110,000, Implications Discussed
In the recent financial landscape, Bitcoin has experienced a price drop, a trifecta of factors contributing to the downturn: new US tariff announcements, profit-taking near resistance, and US Spot Bitcoin ETF outflows. Despite this, the world's leading cryptocurrency has managed to maintain a relatively stable position, trading at $114,260 as of writing, up by 0.8% in the past 24 hours.
A significant development in Bitcoin's chart is the emergence of an inverted head and shoulders pattern, a bullish technical indicator, first shared on the social media platform X. This pattern, characterized by a deep head between March and April, flanked by a left shoulder in early February and a right shoulder that took shape across June and July, is a major bullish pattern.
Crypto analyst Merlijn The Trader has analysed this pattern and projects that its completion could signal a strong bullish move. He suggests that the price targets around $121,000 to $123,000 are logical resistance zones based on Fibonacci extensions and recent price structure. The analyst highlights the importance of the $118,000 level, characterized as a key CME futures gap "magnet," which historically acts as a catalyst for upward price movement.
Merlijn The Trader's analysis also points to a golden cross on the weekly chart, historically linked to large rallies, implying strong upside continuation. His broader view supports a multi-year rally potentially pushing Bitcoin closer to or above prior all-time highs near $123,000 and possibly higher as the bull market progresses.
However, it's important to note that Bitcoin fell to levels just below $115,200 on August 1, following a wave of selling over the weekend that pushed the price down to $112,200. The ensuing retest after the peak until the time of writing is a "bullish retest," indicating that the previous neckline resistance has now become support.
Despite the recent dip, Merlijn The Trader still believes Bitcoin is on track to launch toward $145,000. If Bitcoin can successfully bounce upward on the breakout line, the chart's projection suggests a potential surge to $145,000. A surge to this price target would translate to a 27% increase from the current price levels.
The US Spot Bitcoin ETF outflows likely contributed to the downward price momentum as institutional demand briefly waned. On August 1, US Spot Bitcoin ETFs recorded over $812.25 million in net outflows, marking one of their worst days in 2025.
In conclusion, while Bitcoin has experienced a price drop due to various factors, the emergence of an inverted head and shoulders pattern and the bullish retest indicate a strong potential for Bitcoin to bounce back and surge towards predicted highs.
- Merlijn The Trader, in his analysis, sees technology playing a crucial role in the potential surge of Bitcoin, with the golden cross on the weekly chart being a historically significant indicator for large rallies and strong upside continuation.
- Amidst the recent downturn in the finance sector, some investors might find investing in Bitcoin appealing, considering Merlijn The Trader's prediction of a potential 27% increase in price if the breakout line is successfully breached, leading to a surge towards $145,000.
