Oversold rebound kicks off the New Year trend; reducing positions on rallies is more prudent | Exclusive Analysis

Hello everyone, I am your old friend, Cody, a market analyst invited by Odaily. Before starting today’s Bitcoin market analysis, I want to say:

Tomorrow is the Lunar New Year’s Day. Here, I wish all readers a Happy New Year in advance.

Over the past year, the market has experienced constant fluctuations, with phases of smooth sailing and repeated tests of volatility. Regardless of the investment results this year, I hope that in the new year, all readers can maintain a stable mindset, clear rhythm, and manageable risks.

Cody also sends his most sincere wishes:

May everyone succeed instantly in the new year, be blessed immediately, see long-term gains in your accounts, and have peace and safety for your family.

Festivals are brief, but the market never stops.

Returning to the market itself, during this special Spring Festival window, the price structure, capital behavior, and market sentiment of Bitcoin are showing some noteworthy changes.

Weekly Market Summary Highlights:

• Trend structure update: Analysis of Bitcoin’s decline within wave C, including the C-2 wave correction and the upcoming C-3 wave decline structure. (See Diagram 1 for details)

• Short-term strategy execution (effectiveness verification): Last week, trading followed the established short-term strategy, completing two short-term trades (1x leverage), with a total profit of approximately 4.01%. (See Table 1 for details)

• Medium-term strategy execution (effectiveness verification): Last week, following the medium-term plan, holding a short position built at around $89,000 (1x leverage), with a profit of about 22.71% by week’s close, and a maximum profit of approximately 32.58% during the period.

• Core short-term view verification: After Bitcoin found support near $65,000, it entered a consolidation and rebound phase. Multiple technical signals suggest this level may be the bottom of wave C-1. The current trend aligns with previous expectations of a oversold rebound in wave C-2, and the market structure is gradually transitioning toward a recovery phase.

Below, I will review the market forecast, strategy execution, and specific trading processes in detail.

1. Detailed Explanation of the Internal Three-Phase Adjustment Structure of Wave C

Bitcoin Daily K-line Chart

Diagram 1

In my weekly review on February 8, I clearly pointed out that Bitcoin’s correction since the high on October 6, 2025, follows a classic A-B-C three-wave structure, and I projected several possible internal wave structures for wave C. Currently, since both waves A and B have shown clear three-wave substructure, based on the principles of wave theory of alternation and consistency, the most probable scenario is that wave C will also complete its correction in three segments (C-1, C-2, C-3).

Next, I will analyze in detail the possible three-phase correction patterns within wave C:

1. Overview of the Main Decline in Wave C

• Time and amplitude: Wave C started on January 14, 2026, and has been ongoing for about 32 days, with a maximum decline of 38.7%. This is consistent with wave C being the “main downward wave,” which typically has the largest amplitude and most intense movement.

2. C-1 Wave: Segments 6-7 in the chart, initial driven decline (already completed)

• This decline lasted from January 14 to February 6, 23 days in total, reaching the target of around $60,000, forming the first “foot” of wave C.

3. C-2 Wave: Segments 7-8 in the chart (dashed line), rebound correction (in progress)

• Current stage: The rebound since the low on February 6 is now defined as wave C-2.

• Technical confirmation: On the daily chart, the candlestick pattern from February 5 to 8 forms a “reversal bottom pattern”, preliminarily indicating weakening downward momentum. Subsequently, from February 11 to 13, the candlesticks further form a “confirmation bottom pattern”, strengthening the validity of February 6 as a short-term bottom. Currently, the price is oscillating along the short-term uptrend line connecting the lows of February 6 and 12. If the future price action develops new changes, I will update accordingly.

• Key resistance zones: Based on historical price behavior, the first resistance for the C-2 rebound is around $74,500. This area not only marks the lower boundary of the previous consolidation zone but also resonates with the 50% Fibonacci retracement of wave A’s decline. The more critical resistance zone is near $79,500, which is a dense trading area (consolidation center) formed during the previous C-1 decline, expected to be a strong obstacle.

4. C-3 Wave: Segments 8-9 in the chart (dashed line), the final decline (possible future scenario)

• Technical confirmation: On the daily chart, a key condition for the formation of wave C-3 is that the price effectively breaks below the short-term uptrend line connecting the lows of February 6 and 12.

• This correction segment will need to break below the February 6 low (around $60,000) to complete the wave pattern. The timing and extent of the final decline will depend on the strength and height of the rebound in wave C-2.

5. Summary of Core Viewpoints:

The market is currently in the expected rebound phase of wave C-2. The strength and height of this rebound, especially whether it can effectively break through the core resistance zone of $74,500–$79,500, will be the key window for judging the subsequent decline in wave C-3. Traders should closely monitor the market reactions near these levels.

2. Last Week’s Bitcoin Trading Strategies and Key Level Review (02.09–02.15)

1. Short-term trading strategy review: As shown in (Diagram 2)

We strictly followed our self-developed spread trading model and momentum quantification model signals, combined with market trend forecasts, completing two short-term trades with a total profit of 4.01%.

Diagram 2

• First trade (profit 2.12%):

• Entry: When the price rebounded near the $72,500 resistance line and the spread quantification model triggered a top warning signal (green dot), combined with the momentum model’s “from long to short” signal, we established a 30% short position at $70,417.

• Risk control: Initial stop-loss at $74,500.

• Exit: When the price fell to around $68,000, candlestick patterns showed bottom signals, and combined with the resonance of two models’ bottom signals, we fully closed the position at $68,924.

• Second trade (profit 1.89%):

• Entry: When the price rebounded near the short-term downtrend line and the momentum model’s momentum line turned “dead cross” below zero, at $68,290, we established a 30% short position.

• Risk control: Initial stop-loss at $70,000.

• Exit: When the price approached $66,500, encountered resistance, and combined with the bottom signals from both models, we fully closed at $67,000.

Bitcoin 30-minute K-line chart: (Momentum quantification + Spread trading models)

2. Medium-term operation review:

Following the plan, holding 60% short position built around $89,000, with a profit of 22.71% by last week’s close.

3. Key levels review:

Resistance zone: $72,000–$74,500

Support zone: $60,000–$62,500

3. Current Technical Indicator Analysis of Bitcoin: Multi-Model and Multi-Dimensional Comprehensive Assessment

Combining market operation, I rely on self-constructed trading systems to analyze multiple technical indicators of Bitcoin from multi-model and multi-dimensional perspectives.

1. As shown in (Diagram 3), from the weekly chart analysis:

Bitcoin Weekly K-line Chart: (Momentum quantification model + Sentiment quantification model)

Diagram 3

• Momentum quantification model: Technical indicators show that the momentum line is moving downward in sync, with negative energy bars still enlarging but at a weakening rate, with no divergence signals.

The momentum model indicates: Bitcoin’s downward momentum index: high

• Sentiment quantification model: Blue sentiment line at 34, with zero strength; yellow sentiment line at 10, also zero, with peak at 0.

Sentiment model indicates: Bitcoin’s support index: neutral

• Digital monitoring model: No bottom signals detected.

Digital monitoring indicates: No digital bottom signals; the weekly candle shows small upper and lower shadows, with a decline of about 2.15%.

All these data suggest: Bitcoin’s weekly trend is bearish, but the decline is narrowing. Currently, it’s a consolidation in a downtrend.

2. As shown in (Diagram 4), from the daily chart analysis:

Bitcoin Daily K-line Chart: (Momentum quantification + Sentiment quantification)

Diagram 4

• Momentum quantification model: Last week’s overall trend showed a “first decline, then rise” pattern. After Sunday’s session, the momentum line formed its first “golden cross” below zero, with volume bars shifting from negative to positive.

The momentum model indicates: Bullish momentum is beginning to accumulate, and the short-term trend may gradually strengthen.

• Sentiment quantification model: After triggering a bottom warning signal (red dot), both sentiment lines started to turn upward. After Sunday’s session, the sentiment lines moved out of oversold territory and began a slow ascent.

Sentiment model indicates: Bottom warning signal validated by the market; sentiment lines are slowly turning upward, indicating oversold sentiment is being repaired.

These data suggest: The daily trend remains bearish, but the current move is an oversold rebound. A small rebound is likely, so short-term long positions should be controlled carefully.

4. This Week’s Market Forecast (02.16–02.22)

1. Core view: The rebound in wave C-2 is likely already underway. Focus on the market’s performance when the price approaches key resistance zones.

• For traders participating in this short-term rebound, the strategy should be “reduce positions on rallies and lock in profits”;

• For those with previous losses, strictly implement “reduce on rallies, roll over positions, and control risks”.

2. Key resistance levels:

• First resistance zone: $72,000–$74,500 (near last April’s low)

• Second resistance zone: $79,500–$80,600 (near wave B initiation point)

3. Key support levels:

• First support: around $65,000 (previous candlestick bottom point)

• Second support: $60,000–$62,500 (near February 6 low)

• Third support: around $57,400 (near the 210-week moving average)

5. Trading Strategies for This Week (excluding unexpected news impacts): (02.16–02.22)

1. Medium-term strategy: Maintain 60% short positions. If the rebound effectively breaks through $74,500, reduce to 40%.

2. Short-term strategy: Use 30% of the capital, set stop-loss points based on support and resistance levels, and look for “spread” trading opportunities (using 30/60-minute cycles).

Given the medium-term bearish trend, short-term operations should follow the principle of “trend-following, shorting on rallies.” To adapt dynamically to market evolution and based on signals from our self-built trading models, we propose two short-term plans:

• Plan A: If the price rebounds to $72,500–$74,500 and encounters resistance:

• Open a 15% short position when resistance signals are triggered and combined with model top signals.

• Risk control: Set initial stop-loss about 1.5% above cost (i.e., 1.015× cost).

• Close gradually near key support levels, taking profits as signals confirm.

• Plan B: If the price rebounds to $79,500–$80,600 and encounters resistance:

• Open a 30% short position under similar conditions.

• Risk control: Same initial stop-loss at about 1.5% above cost.

• Close gradually near support levels, locking in profits.

6. Special Reminders:

• When opening a position: Immediately set an initial stop-loss.

• When profit reaches 1%: Move stop-loss to break-even (cost basis).

• When profit reaches 2%: Move stop-loss to 1% profit level.

• Continuously monitor: For every additional 1% profit, move the stop-loss up by 1% to protect gains and lock profits.

Financial markets are volatile; all analysis and trading strategies should be dynamically adjusted. The viewpoints, models, and strategies discussed are based on personal technical analysis and are for personal reference only. They do not constitute investment advice or operational guidance. Market risks are inherent; please trade cautiously and do not base decisions solely on this information.