This week saw limited movement in many assets, with bitcoin being an exception as it rose over 9% in the past two days. The surge lacked a clear catalyst, with usual explanations such as ETF inflows and expected Fed rate cuts being mentioned.

This increase appears technically driven, with momentum boosting after surpassing a previous high, resembling a short squeeze. Data from Coinglass indicates over $1 billion in liquidations during the rally, suggesting forced position closures by short sellers.

With background fiscal and monetary policies, bitcoin’s path skewed upwards. The breakout from a bullish pattern supports potential new highs before the US CPI release. A strong CPI could prompt a correction due to altered interest rates expectations, but softer figures might continue the rally.

On the daily chart, breaking out of a bullish flag sets a technical target around $135,000, though $125,000 is more conservative. On the 4-hour chart, a new upward trendline supports the bullish momentum. For the 1-hour chart, the rally’s recent parabolic nature suggests caution, yet dip-buyers eye support at the minor trendline about $114,000. Buyers and sellers are likely to focus on the trendlines around $110,000 for further direction.

What you’ve just read outlines a sharp rise in bitcoin’s price, not because of any dramatic change in policy or external shock, but more due to chart-driven traders reacting to market levels. The move caught many off-guard, particularly those attempting to ride falling prices, as data suggests a massive volume of liquidations – essentially traders being forced out of their short trades. This kind of action tends to feed on itself for a while. When momentum builds, it can push prices further than initially expected.

Our interpretation is straightforward: the move above a prior ceiling on the charts triggered automated buying and squeezed out bearish positions. That’s textbook behaviour when speculative money dominates. Once certain levels were breached, algorithms and momentum funds jumped in, adding fuel. Meanwhile, some eyes remain fixed on broader economic factors like inflation data and the assumed path of Federal Reserve rates, but these aren’t new stories – they’ve been at play for months.

Now, from where we are, the daily flag breakout suggests traders might be eyeing levels as high as $135,000. That said, from our side, momentum in the near term could easily run into exhaustion because of the steepness of recent moves. Looking at the hourly view, it’s gone nearly vertical, which has a habit of correcting quickly. So while the longer-term indicators tilt bullish, we’re watching for whether price can hold around $114,000 if it slips.

It’s the minor trendline near $110,000 that we believe may offer the first real signal. If sellers push through that, then the assumption of trend continuation could get shaky. Until then, many will treat dips as opportunities, rather than warnings. That being said, this requires vigilance. Complacency here can be costly, particularly if expectations around rate cuts shift based on new inflation data.

While we’re leaning on the charts in the absence of fresh macro news, we shouldn’t dismiss the wider backdrop entirely. If inflation numbers come in hot, the rally could lose footing quickly. On the other hand, cool data may deepen the conviction among those already long. Either way, risk management becomes paramount now – especially for those trading with leverage. Once prices move this far, this fast, it’s rarely smooth sailing from that point on.