Bitcoin could extend its latest rally toward $98,000 after breaking above a bull flag pattern on the daily chart. According to FX Empire, the bullish setup was reinforced by a large short squeeze, as bearish positions were forced out of the market.
On Sept. 21, Bitcoin rose more than 5% and reached an intraday high of about $85,285. The move pushed the asset decisively above the upper boundary of the bull flag formation. The pattern developed after BTC climbed almost vertically from around $62,500 in August to above $81,000, then entered a consolidation phase between two downward-sloping trendlines.
In technical analysis, a bull flag is generally viewed as a continuation pattern. Traders usually estimate the upside target by adding the height of the prior rally, or “flagpole,” to the breakout point. In Bitcoin’s case, that flagpole measures roughly $18,000-$19,000. Added to the $79,000-$80,000 breakout zone, it implies a technical target near $98,000, or roughly 15% above current levels.
BTC is also trading comfortably above its key daily exponential moving averages. The 20-day EMA stands near $78,633, the 50-day EMA near $74,929, while the 100-day and 200-day EMAs are around $72,286 and $73,477, respectively. At the same time, the daily relative strength index, or RSI, has risen to about 72, placing the asset in technically overbought territory. That raises the risk of a short-term pullback or consolidation before another leg higher.
The report notes that a decisive move back below the flag structure, especially beneath the 20-day EMA, would weaken the bullish continuation case.
Short squeeze adds to the breakout
The breakout came alongside an aggressive unwind of bearish positions in derivatives markets. Latest liquidation data show that about $431.74 million in leveraged crypto positions were liquidated over the past 24 hours.
Of that total, $384.71 million came from short positions, compared with just $47.03 million in long liquidations. That means shorts accounted for roughly 89% of all liquidations, underlining how severely the latest move hit bearish traders. Short liquidations were also more than eight times larger than long liquidations.
As BTC moved through the $82,000-$82,300 resistance zone, forced short covering likely created additional buying pressure and helped accelerate the advance toward $85,000.
The broader macro backdrop also provided support. Oil prices fell on Monday, easing some inflation concerns and helping Treasury bonds recover, while global equities advanced. Bitcoin also benefited from that improvement in market sentiment.
