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, the featured market analyst at 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 Spring Festival in advance.

Over the past year, the market has experienced constant fluctuations, with periods of smooth sailing and times of repeated 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 at the start of the new year, have good fortune immediately, see continuous gains in your accounts, and enjoy peace and safety with your family.

Festivals are brief, but the market never stops.

Returning to the market itself, during this special Chinese New Year period, Bitcoin’s price structure, capital behavior, and market sentiment are showing some noteworthy changes.

Weekly Market Summary:

• Trend Structure Update: Analysis of Bitcoin’s decline within Wave C, including Wave C-2, and interpretation of the upcoming Wave C-3 decline after the rebound ends. (See Chart 1 for details)

• Short-term Strategy Execution (Validation): 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)

• Mid-term Strategy Execution (Validation): Last week, following the mid-term strategy, holding a short position built at around $89,000 (1x leverage), closed with a profit of about 22.71%, with a maximum profit of approximately 32.58% during the period.

• Core View (Validation of Short-term Outlook): After Bitcoin found support near $65,000 last week and entered a consolidation rebound, multiple technical signals suggest that this level may be the bottom of Wave C-1. The current trend aligns with previous expectations of an oversold rebound in Wave C-2, and the market structure is gradually transitioning toward a recovery phase.

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

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

Bitcoin Daily Chart

Chart 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 Wave A and Wave B have shown clear three-wave substructures, based on the principles of wave pattern alternation and consistency in wave theory, the most probable scenario is that Wave C will also complete its correction in three parts (C-1, C-2, C-3).

Now, let’s analyze the possible three-phase correction pattern within Wave C in detail:

1. Overview of the Main Decline in Wave C

• Time and Magnitude: Wave C started on January 14, 2026, and has been ongoing for about 32 days, with a maximum decline of 38.7%. This aligns with the typical characteristic of Wave C as the “main downward wave,” usually the largest and most intense.

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

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

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

• Current stage: The rebound from the February 6 low is now defined as Wave C-2.

• Technical confirmation: On the daily chart, the candlestick pattern from February 5 to 8 forms a “turning bottom pattern,” preliminarily indicating weakening downward momentum. Subsequently, from February 11 to 13, the candlesticks form a “confirmation bottom pattern,” reinforcing 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 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 near $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. More importantly, the major resistance is around $79,500, which is a dense trading zone (consolidation center) formed during the previous Wave C-1 decline, expected to present strong resistance.

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

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

• This correction phase will require breaking 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 Wave C-2 rebound.

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 key resistance zone of $74,500–$79,500, will be critical for judging the subsequent downward movement of 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)

3. Short-term Trading Strategy Review: As shown in Chart 2

We strictly followed our proprietary price spread trading model and momentum quantification signals, completing two short-term trades with a total profit of 4.01%.

Chart 2

• First Trade (Profit 2.12%):

• Entry: When the price rebounded near the resistance line at $72,500 and the price spread model triggered a top warning (green dot), combined with a momentum shift signal from the momentum model, 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, reinforced by the bottom resonance signals from both models, 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 momentum indicator showed a “death cross” below zero, we established a 30% short at $68,290.

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

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

Bitcoin 30-minute candlestick chart (Momentum + Spread Models)

2. Mid-term Strategy Review:

The mid-term strategy was to hold a 60% short position built around $89,000, with a profit of 22.71% as of last week’s close.

3. Key Levels Review:

Resistance zones: $72,000–$74,500

Support zones: $60,000–$62,500

3. Current Technical Indicator Analysis of Bitcoin: Multi-model and Multi-dimensional Comprehensive Assessment

Combining market operation data, I use my proprietary trading system to analyze multiple technical indicators from various models and dimensions.

1. As shown in Chart 3, from the weekly chart analysis:

Bitcoin Weekly Chart (Momentum + Sentiment Quantification Models)

Chart 3

• Momentum Model: Technical indicators show the momentum line is trending downward, with negative energy bars still enlarging but at a decreasing rate, with no divergence signals.

Momentum indicator suggests: high downward price decline index.

• Sentiment Model: Blue sentiment line at 34, with zero strength; yellow sentiment line at 10, also zero; peak value is 0.

Sentiment indicator suggests: neutral support index at the bottom.

• Digital Monitoring Model: No bottom signals detected.

Digital monitoring indicates: no digital bottom signals; weekly candlesticks show small bearish candles with about 2.15% decline.

These data suggest: Bitcoin’s weekly trend remains bearish, but the decline is narrowing. Currently, it’s a consolidation within a downtrend.

2. As shown in Chart 4, from the daily chart analysis:

Bitcoin Daily Chart (Momentum + Sentiment Models)

Chart 4

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

Momentum indicator suggests: bullish momentum is beginning to accumulate, with a potential short-term strengthening.

• Sentiment Model: After triggering a bottom warning (red dot), both sentiment lines started turning upward. After Sunday’s close, the sentiment lines moved out of oversold territory and began a slow ascent.

Sentiment indicator suggests: bottom warning signals are validated; market sentiment is gradually recovering from oversold conditions.

These data imply: 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)

5. Core View: The current rebound in Wave C-2 has probably already formed. 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 positions 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 pattern low)

• 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)

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

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

8. Since the medium-term market trend remains bearish, short-term trading should follow the principle of “trend-following, shorting on rallies.” To adapt dynamically to market evolution and based on signals from my proprietary models, I propose two short-term plans:

• Plan A: If the price encounters resistance at $72,500–$74,500:

• Entry: Triggered when the rebound hits resistance and model signals indicate a top, establish a 15% short position.

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

• Exit: When the price approaches a key support zone and model signals confirm, gradually close the position for profit.

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

• Entry: Triggered when the rebound hits resistance and model signals indicate a top, establish a 30% short position.

• Risk control: Set initial stop-loss about 1.5% above the entry price.

• Exit: When the price drops to support levels and model signals confirm, gradually close for profit.

6. Special Reminders:

7. When opening a position: immediately set an initial stop-loss.

8. When profit reaches 1%: move the stop-loss to the break-even point (entry price) to protect capital.

9. When profit reaches 2%: move the stop-loss to 1% profit level.

10. Continuous tracking: for every additional 1% profit, move the stop-loss up by 1%, dynamically protecting gains and locking profits.

Financial markets are ever-changing; all analysis and trading strategies should be adjusted dynamically. The viewpoints, models, and strategies discussed herein are based on personal technical analysis only, for personal trading logs, and do not constitute investment advice or operational guidance. Markets carry risks; please trade cautiously and do not base decisions solely on this information.