Bitcoin and Ethereum Breakouts Fail: Key Support Levels, Liquidations and Trading Plans

Market snapshot: breakouts fail, volatility spikes

Bitcoin (BTC) and Ethereum (ETH) both saw bullish breakout attempts in early January, but recent price action has invalidated those moves. BTC closed back under 90,000 and printed a daily close below the lower border of a rising wedge, while ETH failed to hold gains above the Jan. 6 high and closed below key bullish support. The sell-off has been amplified by futures liquidations and on-chain dynamics, leaving clear risk/reward zones for traders.

What happened — the data that matters

Key market facts from the latest flows:

- BTC closed below 90,000, erased the Jan. 5 bullish gap and closed under the rising-wedge support — a bearish technical invalidation.

- ETH closed below its bullish support line and is underperforming BTC after post-upgrade usage patterns shifted. Market providers reported $156.5M of crypto futures liquidations in 24h, including roughly $104.4M of short liquidations; ETH reacted sharply to this volatility.

Why the moves matter for traders

The rejection of breakout levels removes a near-term bullish thesis and increases the likelihood of momentum-led selling. Large futures liquidations suggest crowded positioning, which can both exaggerate moves and set the stage for sharp counter-moves (short squeezes) if sentiment flips. For disciplined retail traders, these conditions reward strict risk control, clear stop placement and measured position sizing.

Technical outlook — Bitcoin (BTC)

Levels to watch

- Immediate resistance: 90,000 (recent failed breakout) and the lower boundary of the rising wedge.

- Immediate support: late-December lows / 61.8% Fibonacci zone (near-term support cluster).

- Deeper downside targets if support breaks: measured wedge projection ~78,214 and psychological 80,000; further structural support near the 78.6% Fibonacci and the bottom of the prior island reversal.

Trade scenarios

- Bear continuation: failure to reclaim the wedge and a confirmed breakdown with momentum suggests tactical short opportunities targeting the 80,000–78,000 area. Use tight stops above the recent reclaimed resistance and scale into conviction.

- Bull invalidation reversal: if BTC quickly reclaims the broken rising wedge and closes back above 90,000 with volume, short-term bullish continuation becomes possible — consider a small, disciplined long with stops below the reclaimed zone.

Technical outlook — Ethereum (ETH)

Levels to watch

- Immediate resistance: near-term rejection zone around 3,060 where ETH was recently turned away.

- Immediate support: 2,860 (important near-term pivot that bounced earlier); next downside range 2,797–2,757 (Dec lows / 61.8% fib) and potential extension toward ~2,500 if those breaks fail.

Structural drivers and risks

- Protocol and network changes (post-Fusaka upgrade) temporarily boosted throughput but JPMorgan and others note these activity surges can fade as users migrate to Layer-2s and rival chains. Lower Layer-1 fees and reduced ETH burn can be a structural headwind for ETH price if adoption shifts away from on-chain transactions.

- Technical risk: rejection at 3,060 plus elevated liquidations increases the odds of momentum-driven downside; conversely, a clean hold above 2,860 and push above 3,060 would set up a mean-reversion bounce toward the 20-day EMA.

Practical trade ideas and risk management

Positioning and order placement

- Size positions so a stop loss equals a small, defined percentage of your capital (e.g., 1–2%). Volatile post-liquidation environments can exceed typical ranges.

- Use limit entries around support/resistance clusters and confirm with volume or a momentum indicator (RSI/stochastic) before committing larger size.

Pair trades and hedges

- Consider relative-strength plays: if BTC weakens and ETH underperforms, a short ETH/BTC pair exposure can isolate altcoin-specific weakness versus broader bitcoin-driven flows.

- Use staggered stops and take-profit levels to manage the high intraday volatility that follows large liquidation events.

How automation can help in this environment

High-volatility episodes reward consistency and discipline — two strengths of automated trading. Automated strategies can execute predefined entries, exits and risk rules without emotion, helping traders manage slippage and react quickly to momentum breaks or reversals.

For example, a pre-programmed BTC breakout/failure strategy can short a confirmed breakdown under 90,000 with a fixed stop and layered take-profit targets, while a mean-reversion bot can buy ETH near 2,860 if certain momentum and volume conditions align. PlayOnBit offers tools that integrate automated execution with risk controls: try a Bitcoin Trading Bot for BTC-specific rules or the Binance Trading Bot for multi-asset crypto execution. You can also use the Trade Assistant Bot to alert and manage manual-to-automated transitions.

Checklist for active traders

- Confirm direction with daily closes and volume before adding size.

- Factor in futures funding rates and recent liquidation history when sizing positions.

- Monitor on-chain signals for ETH (fees, burn, L2 activity) and macro liquidity cues for BTC (risk-on/risk-off flows, USD moves).

Conclusion and next steps

Recent invalidated breakouts in BTC and ETH increase short-term downside risk but also create clearly defined tradeable ranges. Successful execution requires disciplined risk control, clear level-based plans and rapid order management in a high-volatility environment. Whether you prefer discretionary setups or systematic rules, automated trading and AI-driven assistants can help enforce discipline and reduce emotional errors.

If you want to test automated approaches for the current market environment, consider experimenting with a tailored strategy on PlayOnBit — from a Bitcoin-specific system to multi-exchange crypto bots and the Trade Assistant. These tools are designed to support crypto trading, automated trading and more sophisticated execution while keeping risk management front and center.

Try an AI trading bot at PlayOnBit and start testing disciplined setups with controlled risk.