How Liquidity Trends Fit Into Bitcoin’s Long-Term Cycle

In an X post, Crypto expert MartyParty pointed out a compelling pattern in Bitcoin’s price behavior, stating that its high-timeframe follows global liquidity, indicated on the chart as the blue line following the red line lagged 12 weeks. 

Currently, the global liquidity curve is on the rise, and the US has not started issuing new liquidity, meaning the current surge is being fueled externally. MartyParty argues that this global liquidity wave is primed to push BTC toward the $125,000 mark on foreign liquidity issuance.

The current macro thesis suggests that BTC could reach $140,000, driven purely by the influx of foreign liquidity. In the meantime, the upcoming US liquidity issuance is expected to begin within the next quarter and will last up to a year to eighteen months. 

Once the US liquidity kicks in, combined with expected rate cuts that will lower borrowing costs, it will create a compelling setup for the BTC price to potentially rally to $250,000 in the medium to long term. 

Daan Crypto Trades has revealed that Bitcoin’s impressive resilience and steady upward trend relative to the US stock market have been trending since its bottom in 2022. Over this period, BTC has experienced only four moderate corrections ranging between 20% and 30%, while delivering a 420% gain from bottom to top. This steady outperformance suggests that BTC has carved out a strong position as a growth asset, especially in risk-on market environments.

How Bitcoin’s Current Energy Value Growth Differs From Past Cycles

Another notable development is the Bitcoin Energy Value, which just reached a new all-time high of $135,000 per BTC. According to StarPlatinum, in previous market cycles, reaching such peaks in Energy Value has been associated with sharp price moves or big drops.

Currently, the rise in Energy Value is gradual and steady, reflecting a more natural market progression. This data reveals several key points about BTC’s current state. First, BTC is stronger and more mature than ever, with demand steadily increasing over time.

Despite hitting a new all-time high on Energy Value, the current price still sits about 15% below this metric, indicating there’s still room to run. Historically, the BTC cycle top occurred when its price surged 40% to 60% above its Energy Value. Meanwhile, many in the crypto community have spent three years saying BTC is close to the top, only to see those calls followed by waves of FOMO.

Ethereum has bounced back sharply, reclaiming the $2,400 level after a volatile week marked by geopolitical tensions in the Middle East. Last weekend, ETH briefly dipped below the $2,200 mark as panic selling swept across global markets following US attacks on Iranian nuclear facilities. The sell-off triggered a sharp fakeout that briefly pushed ETH out of its multi-week trading range. However, bulls are regaining control, and Ethereum’s price action now signals the early stages of a potential recovery rally.

Related Reading

Top analyst Ted Pillows shared a technical analysis highlighting that Ethereum is reclaiming the key $2,444 resistance level — a zone that previously acted as both support and resistance throughout May and June. If bulls maintain momentum above this threshold, it could open the door for a bullish continuation toward the higher end of the established range.

While uncertainty remains due to lingering macroeconomic and geopolitical risks, Ethereum’s current structure shows renewed strength. Market participants are watching closely, as ETH often serves as a leading indicator for broader altcoin performance. Holding above $2,400 could become a catalyst for a broader rally, especially if Bitcoin continues to stabilize and approach new all-time highs.

Ethereum Battles For Breakout As Market Awaits Direction

Ethereum is trading at a critical juncture after a turbulent week of price action driven by geopolitical instability and macroeconomic uncertainty. Following a sharp drop below $2,200 amid panic selling over the Middle East conflict escalation, ETH has recovered significantly, now hovering around the $2,444 level. This price zone is key, not only as a technical resistance but also as a sentiment marker for traders watching for signs of a trend reversal or confirmation of a deeper pullback.

Analysts remain divided on what comes next. Some believe Ethereum’s recent recovery could signal the beginning of a bullish continuation, especially if price action holds and pushes above the upper range levels near $2,600. A breakout from this zone would indicate renewed strength and could set the tone for a broader altcoin rally, particularly as Ethereum often leads sector momentum. Others, however, warn that the recovery might be short-lived, and a retreat to lower demand zones could occur if macro conditions worsen.

Ted Pillows notes that Ethereum is currently reclaiming the $2,444 resistance level. He emphasizes that bullish continuation into the range highs is necessary to confirm breakout strength. Until then, traders are watching closely, as any rejection at this level could shift momentum back to the downside. With global tensions and monetary tightening from central banks continuing to influence markets, the coming weeks may determine whether ETH enters a new uptrend or retreats further into its long-standing consolidation range.

Related Reading

ETH Faces Long-Term Resistance

The weekly chart of Ethereum (ETH/USD) shows a strong recovery from the $2,189 low, with ETH currently trading at $2,463 — a 10.5% gain so far this week. This sharp bounce comes after a fakeout below the $2,200 level and suggests renewed buying pressure following recent geopolitical volatility. However, price is now testing a major confluence zone formed by the 50-week ($2,660), 100-week ($2,625), and 200-week ($2,437) simple moving averages.

This cluster of moving averages is acting as resistance, capping ETH’s upside momentum. Historically, when Ethereum breaks through these long-term trend lines, a significant trend continuation follows. But for now, bulls must decisively clear this $2,450–$2,660 zone to confirm a breakout and open the door toward the $3,000 psychological level.

Related Reading

Volume has slightly increased, indicating rising interest, but the rejection wicks from prior weekly candles suggest the market remains indecisive. As long as ETH holds above the 200-week SMA ($2,437), the structure remains constructive, but a breakdown below it would likely reintroduce bearish sentiment.

Featured image from Dall-E, chart from TradingView

A closely followed crypto analyst is predicting Ethereum’s (ETH) path to all-time highs, as well as updating his outlook on two other big altcoins.

Trader Michaël van de Poppe tells his 786,500 followers on the social media platform X that he’s expecting ETH to start making a run to $4,800 with anything below the $2,400 level a bargain for bulls.

“Anything sub $2,400 on ETH is, after this big move upwards, a steal before we’ll start to run of towards the ATH’s (all-time highs) for Ethereum.”

At time of writing, ETH is trading at $2,387, nearing Van de Poppe’s high time frame support area.

The trader is also keeping an eye on decentralized blockchain oracle service Chainlink (LINK). According to Van de Poppe, LINK is most likely a solid play looking ahead, with the $14 level being a potential entry point for bulls.

“It would be great if LINK holds this first level of support.

If buying pressure comes in here, that’s a sign of continuation.

What is the next level?

Around $14.

All in all, I think that we’ll start up a new cycle and LINK is a good one to monitor.”

LINK is trading for $15.01 at time of writing.

Lastly, the analyst is keeping tabs on Sei (SEI), a layer-one blockchain focused on speed and efficiency. Van de Poppe believes the Solana (SOL) challenger is close to igniting a new leg up.

“SEI flipped the level at $0.19 and continued to run upwards, almost to the level that we wanted it to touch at $0.29.

Standard pullback since, and I think that we’ll be ending the correction relatively soon.”

SEI is worth $0.22 at time of writing.

Follow us on X, Facebook and Telegram

Don’t Miss a Beat – Subscribe to get email alerts delivered directly to your inbox

Check Price Action

Surf The Daily Hodl Mix

&nbsp

Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

Generated Image: DALLE3

Trading successfully depends on recognizing market structures and patterns that indicate whether an existing trend will continue. Trend continuation patterns are important for traders looking to capitalize on ongoing market momentum. This guide will cover the most effective trend continuation patterns, shedding light on how traders can use them to identify lucrative trading opportunities.

2. What Are Trend Continuation Patterns?

Trend continuation patterns are chart formations that signal a temporary pause in a prevailing trend, suggesting that the trend will likely resume after the pattern completes. These patterns matter because they help traders spot opportunities to join a trend after a brief consolidation phase, improving entry timing and minimizing the risk of buying or selling at the wrong time.

In the following we are going to cover the most important and most popular continuation patterns. The key for finding the best continuation pattern is the overall trend context in which the patterns occur. When you spot an ascending triangle, for example, you want it to form after a previous bullish trending phase. Most traders forget this important aspect and then run into problems with their pattern trading because they trade patterns in the wrong context. Thus, making sure you analyze the overall trend context during which patterns form is the most important aspect of finding the best continuation patterns.

3. Top Trend Continuation Patterns Explained

a. Flags and Pennants

Description: Flags and pennants are short-term continuation patterns that form after a sharp price movement, known as the flagpole. Flags are marked by parallel support and resistance trend lines, while pennants feature converging trendlines, resembling a small symmetrical triangle.

Visual Characteristics:

• Pennants: A smaller, converging shape resembling a wedge, or a symmetrical triangle.

Entry and Exit Points:

• Entry: Traders typically enter a trade when the price breaks out of the flag or pennant in the direction of the prior trend.

• Exit: A common strategy is to set the profit target equal to the length of the flagpole.

b. Ascending and Descending Triangles

Explanation: Ascending triangles form during uptrends and are characterized by a horizontal resistance line and an upward-sloping support line. Descending triangles appear in downtrends with a horizontal support line and a downward-sloping resistance line.

Breakout Confirmation:

c. Cup and Handle Pattern

Formation: The cup and handle pattern is a bullish continuation setup where the price forms a “U”-shaped cup followed by a small downward handle. This pattern signals that the market has consolidated and is ready to resume its upward movement.

The handle part of the pattern is the most important signal because it shows that the pressure it building underneath the resistance when the price does not pull back lower. Therefore, the low of the handle should be much higher then the low of the cup.

Duration:

Entry Strategy:

• Entry: Place a buy order above the handle’s resistance.

• Stop-Loss: Positioned below the handle’s low to minimize risk.

• Take-Profit: Often set at a level equal to the cup’s depth.

d. Rectangles (Consolidation Patterns)

Overview: Rectangles are formed when the price consolidates sideways between parallel support and resistance levels, signifying a pause in the trend.

Trade Triggers:

Entry is confirmed when the price breaks above or below the rectangle pattern in the direction of the trend.

Risk Management Tips:

Always wait for confirmation before entering a trade. False breakouts are common in rectangle patterns, so use volume as an additional confirmation tool.

e. Inverted Head and Shoulders

Description: This pattern, usually associated with reversals, can sometimes indicate a continuation during an uptrend. It forms when the price makes three swing lows, with the middle one being the lowest (the head) and the other two (the shoulders) being higher but nearly equal.

Continuation Context:

In an uptrend, the inverted head and shoulders pattern can act as a consolidation before the trend resumes.

Pattern Formation:

The neckline, formed by connecting the peaks of the two shoulders, serves as the breakout level. A successful breakout above this line signals the continuation.

Entry Strategy:

• Enter when the price breaks above the neckline, confirming the pattern.

• Stop-Loss: Place a stop-loss just below the right shoulder for protection.

f. Inside Day:

Formation: When, during an uptrend, a small inside daily candle forms, a potential next-day-breakout, can be a strong continuation signal. The pattern of momentum-inside-momentum candlestick can often be observed during a trending market.

Candle size:

The closer the price closes to the high of the previous momentum candle, the better the overall signal. If the price is able to push against the previous momentum candle in a strong way, it signals too much trend opposition.

Entry Strategy:

After the daily inside candle has fully closed, traders go to a lower timeframe to look for short-term entry patterns. Trader can choose any of the previously discussed continuation patterns and wait for them to show up on the lower timeframe after the inside candle has closed.

4. How to Identify a Valid Continuation Pattern

Support and resistance levels are essential for defining the pattern’s structure because they typically form the boundaries of trend continuation patterns.

Identifying trendlines also helps confirm the pattern’s boundaries and potential breakout points when dealing with patterns that do not follow horizontal boundaries.

In an uptrend, observing higher lows approaching a resistance level can indicate that pressure is building. This observation is crucial for patterns like triangles and cup and handles.

5. Trading Strategies Using Trend Continuation Patterns

Time Frames:

Patterns like flags and triangles can be observed in various time frames, from 1-hour to daily charts.

Use a higher time frame (HTF) to establish trend direction and a lower time frame (LTF) to find entry opportunities using continuation patterns.

Entry and Exit Strategies:

• Typically, traders wait for a complete candle close above the pattern boundary before executing a trade. Pending order trading strategies are more prone to false signals but some traders may choose to place entry orders slightly above breakout levels.

• Set stop-loss orders below recent swing lows (in uptrends) or highs (in downtrends) for effective risk management. The close the stop loss to the breakout level, the more vulnerable the stop loss to short-term volatility.

• Define profit targets based on the measured move principle, such as the height of the pattern. Alternatively, using a fixed reward:risk ratio based on the stop loss distance is another great approach to work out targets.

6. Conclusion

Trend continuation patterns are invaluable tools for traders aiming to ride existing trends with more confidence and precision. Patterns like flags, pennants, triangles, cups and handles, and rectangles offer clear signals when correctly identified and traded in the correct higher timeframe context.

The huge benefit of pattern trading lies in their high level of objectivity. Patterns should be obvious when they form on your charts, removing a lot of uncertainty and subjectivity that other trading approaches bring.

Incorporating these patterns into your trading strategy and practicing them in a demo environment or by backtesting historical data can improve your technical analysis skills. Take time to observe, practice, and journal your findings for consistent growth in your trading journey.