Bitcoin has broken out of a descending channel and moved above a key resistance area, but the price is now returning to test the important $66,000 region. Breakouts from descending channels are closely watched by traders as potential early signals of a trend shift, particularly when they coincide with a retest of a prior resistance level that may flip into support. The next technical question is whether this zone can be established as support, or whether the move proves to be a bull trap.

BTC returns to test key support

Source: TradingView

On the 4-hour time frame, the BTC price appears to be moving back toward the $65,600 horizontal level for a potential support test. The move follows a breakout above that level and a rise to a new local high of $67,900.

The unresolved issue is whether BTC will hold at the horizontal support area and build a base there, or whether the price will fall back through the level and retest the upper boundary of the former descending channel. Because $65,600 had been a difficult level to break above, it may act as support. However, a quick wick down to the top of the channel also remains possible.

Could BTC continue toward $73K?

Source: TradingView

On the daily chart, BTC has moved down to touch the horizontal level that may now be confirmed as support. If that level continues to hold, the chart setup suggests that a bounce could follow once buyers regain momentum.

The chart also shows a possible path that offers a rough indication of where price action could move next, with the upside appearing to be the more likely direction in that scenario. The measured-move target is $73,440, which aligns closely with a resistance level near Bitcoin's prior all-time high zone reached earlier in 2024.

Weekly close remains critical

Source: TradingView

Looking further out to the weekly time frame, caution remains warranted. Weekly closes carry particular significance in cryptocurrency markets, where weekend illiquidity can amplify volatility and candlestick confirmations on higher time frames are often treated as more reliable indicators of directional intent than intraday moves. While the shorter-term charts appear constructive, several more days are needed to determine whether the new weekly candle can close above the descending channel and also above the $66,000 area, which still represents horizontal resistance on that time frame.

The setup could allow for a major breakout and a rally that would help move Bitcoin beyond the bear-market structure. However, if buyers lose conviction over the next few days and do not fully support the move, a fakeout and subsequent rollover could extend the bear market, at least until Q4 of this year.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.