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Bitcoin has recently been trading below the $120,000 mark, indicating a potential slowdown after struggling to maintain levels above $118,000. Nevertheless, an intriguing bullish pattern has emerged amidst the market’s fluctuations. Esteemed crypto analyst Merlijn The Trader suggests that Bitcoin has successfully formed a textbook inverted head and shoulders pattern, hinting at a significant upward move on the horizon.
Technical Patterns Indicate a Bullish Trend
Bitcoin experienced a correction following a temporary peak of $119,400 on July 28. By Friday, August 1, the cryptocurrency’s value had dropped to under $115,200, marking the week’s most significant decline. As of now, Bitcoin remains below $115,000. However, according to Merlijn The Trader’s insightful technical analysis, Bitcoin is poised for a potential rally toward $145,000.
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The chart, initially shared on the social media platform X, displays a classic inverted head and shoulders pattern, widely regarded as a reliable indicator of a bullish reversal in technical analysis. This setup includes a pronounced head forming between March and April 2025, with a left shoulder emerging in early February and a right shoulder developing throughout June and July. The breakout above the neckline at $110,000 propelled Bitcoin to its recent all-time high of $122,838 on July 14.
Merlijn highlights the significance of the subsequent price retest, termed a “bullish retest,” where Bitcoin reapproaches the breakout level without breaching below the neckline. This suggests that the former resistance at the neckline has now become a support level. According to Merlijn, all technical criteria are met, and substantial market movements often commence subtly before gaining momentum. The projected price target points to a potential surge to $145,000, contingent on Bitcoin’s ability to rebound from the breakout line, as depicted in the 3-day candlestick chart.
Temporary Sentiment Shift Due to ETF Outflows
Despite the optimistic pattern, the latter part of the week saw a more cautious sentiment. Bitcoin’s inability to maintain the $118,500 level triggered a sell-off, resulting in a notable retracement over the weekend.
This downturn was driven by a combination of factors, including concerns stemming from new US tariff announcements on Friday, traders capitalizing on profits near resistance levels, and the performance of US Spot Bitcoin ETFs. Together, these factors led to a retracement to $112,200 on Saturday, August 2.
Notably, on August 1, US-based Spot funds experienced one of their most challenging days in 2025, with net outflows exceeding $812.25 million. This marked a reversal following consecutive weeks of inflows and contributed to a temporary decline in institutional demand.
Currently, Bitcoin is trading at $114,260, representing a 0.8% increase over the past 24 hours. Achieving the $145,000 target would equate to a 27% rise from the present price levels.
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