Bitcoin's CHOCH Breakdown: Why $67K Relief Rallies Are Traps

The market has erased significant gains in dramatic fashion, and now Bitcoin sits around $67,620 after a vicious liquidation event. While the retail trader base immediately reaches for RSI indicators screaming “oversold,” institutional players are taking a different approach entirely—they’re watching, waiting, and preparing for the moves everyone else will soon regret.

This isn’t a typical pullback in a normal trending market. The technical damage runs far deeper than what most traders realize, and understanding why requires looking beyond surface-level indicator readings.

The ADX Paradox: Why Oversold Doesn’t Mean Cheap

When a market corrects sharply, traders instinctively hunt for reversals. The 4-hour RSI touching 9.5 appears like a screaming buy signal, and the Stochastic oscillator at 4.5 reinforces that feeling. In isolation, these readings suggest an opportunity.

But there’s a critical hidden factor that changes everything: the ADX sits at 74.9.

This is where most retail analysis breaks down. An ADX above 50 signals an extraordinarily powerful directional trend—and this is the counterintuitive part—when ADX reaches this level of extremity, oversold conditions don’t bounce. They persist. Price can grind lower for days while remaining technically “compressed,” all while traders who caught the knife early are watching their positions bleed.

The real traders understand that fighting ADX of this magnitude is a losing proposition. Momentum this strong doesn’t reverse on minor technical signals. It exhausts itself through time and volume accumulation at key structural levels.

CHOCH Confirmed: The Structural Break That Changes Everything

Beyond the momentum indicators lies something far more serious: the market has executed a confirmed Change of Character (CHOCH), and this is where institutions distinguish themselves from the crowd.

An ascending trendline held for 483 trading bars—a span stretching back to March 2020. That’s not just a support level; it’s a multi-year structural foundation. The breakdown of this trendline confirms a bearish CHOCH, signaling that the character of the market has fundamentally shifted from accumulation/distribution phases to potential distribution dominance.

What made this CHOCH confirmation undeniable wasn’t just price action crossing the line—it was the volume signature. Selling volume registered at $134,000, more than double the typical $63,000 average. This isn’t panic selling from retail traders; this is the fingerprint of institutional distribution. Large players systematically reducing positions while the broader market obsesses over RSI levels.

This CHOCH, combined with the broken multi-year structure, tells a story that technical indicators alone cannot capture. The market character has changed, and until that CHOCH is reversed through a new structural break upward, the path of least resistance remains lower.

The Professional Setup: Waiting for Supply Zone Rejection

Here’s where patience separates professional traders from the rest: no entry yet.

Shorting here is already too late—the downside momentum has run. Buying here is still too risky—the structural damage is too fresh, and the ADX is still dominant. The winning move, counterintuitively, is to wait.

Professional traders anticipate a dead cat bounce into the $76,500 to $77,000 range. This level aligns precisely with a bearish order block ($76,952) and captures an unfilled Fair Value Gap—precisely where late buyers will rush in, chasing the perceived “relief rally” after days of selling pressure.

Here’s the setup:

When price reaches the $76,500–$77,000 supply zone, we watch for rejection candles. These candles tell the story—they show whether institutional buyers are stepping in or whether the zone is actively being used to distribute remaining long positions. Rejection signals typically manifest as wicks that fail to hold, followed by momentum reversals back downward.

If this setup triggers, the targets are clear:

• First target: $62,233 (swing low liquidity cluster)
• Second target: $58,000 (major weekly structural support)

The invalidation: Should a 4-hour candle close decisively above $77,000, the supply zone breaks, and the short-term bias flips back to neutral. At that point, the setup is no longer valid, and traders must reassess.

Why Patience Is the Winning Strategy

The difference between retail and professional trading often comes down to one thing: doing nothing when the market screams at you to act.

The market is currently screaming—technical indicators are flashing, volatility is elevated, and fear is palpable. Yet the professionals are in their chairs, waiting. They understand that CHOCH confirmations take time to play out, that ADX readings this extreme demand respect, and that the best trades aren’t the ones you take immediately—they’re the ones you set up in advance and execute with precision when price delivers.

Bitcoin at $67,620 looks cheap to many. It may still go lower. The CHOCH breakdown suggests it will. And the professionals, having already positioned their bias and identified their entry zone, are ready to act when the time is right—not before.

The question isn’t whether Bitcoin bounces. The question is whether you’re standing in front of the institutional dump waiting to catch that relief rally, or whether you’re prepared to fade it from the supply zone where it matters most.