Trading The Close Market Recap - 01/08/2026: Bitcoin Echoes 2021 as Semiconductors and Mega-Caps Face Trendline Tests

In a market session filled with divergent action, traders witnessed small caps reaching for new highs while various technology sectors showed signs of stress and consolidation. In this afternoon's Trading The Close, Pro Trader Drew Dosek of Verified Investing provided a masterclass in technical analysis, breaking down critical trendlines, historical patterns, and key support and resistance zones across a wide range of assets. Today's analysis digs deeper into these concepts, offering expanded context on the cautionary tale developing in Bitcoin, the fractures appearing in the semiconductor space, and the universal principles of price action that can guide traders through any environment.

Bitcoin's Historical Echo: A Warning from 2021?

While short-term price action is important, the most powerful insights often come from zooming out and examining the larger historical context. In today's session, Drew Dosek unveiled a striking and potentially ominous pattern on Bitcoin's daily chart, comparing the current market structure to the one that preceded the major bear market of 2022. As he noted, while patterns don't repeat perfectly, their similarities can provide a valuable roadmap.

"History likes to repeat itself. It doesn't always match up exactly. I like to say history rhymes. So we look at the chart and we find patterns to try to understand where price is going to go."

The pattern in question involves Bitcoin's behavior within its long-term parallel channel. In April 2021, price action consolidated in the upper 50% of the channel, pulled back to the 50% median line, and then bounced to make a brand new all-time high. What followed that new high was a prolonged sell-off that lasted over a year, eventually taking the price down to around $16,000 USD in early 2023.

The chilling observation is that the recent price action has followed an almost identical script: a move up into the top half of the channel, a pullback to the 50% median line for support, followed by a rally to new all-time highs. If this historical rhyme continues, the implication is that a significant corrective phase could be on the horizon. Projecting this pattern forward, a decline to the bottom of the parallel channel could time out around August of this year, targeting a price of approximately $65,000 USD.

For investors, this doesn't necessitate immediate panic, but it does demand a clear understanding of the key support levels that must hold to invalidate this bearish thesis. Drew identified several crucial zones:

• Minor Support: The current consolidation area, which has already been tested. A break below $80,000 USD would be the first warning sign.
• First Major Support Zone: A confluence of prior consolidation and pivot points between $72,000 and $74,000 USD. This is a critical area where buyers would be expected to step in.
• Significant Long-Term Support Zone: A broader range from $60,000 to $65,000 USD. This area aligns with the bottom of the parallel channel and represents a high-probability target if the bearish pattern plays out.

This long-term analysis provides a powerful strategic overlay, allowing traders to contextualize short-term volatility within a larger, historically-informed framework.

Fractures in Tech: A Tale of Two Sectors

The technology space, often treated as a monolith, is currently telling several different stories. Today's analysis of semiconductors, memory stocks, and mega-cap leaders reveals significant divergences that savvy traders must navigate.

The Semiconductor Battleground (SMH)

The VanEck Semiconductor ETF (SMH) spent the day in a technical tug-of-war. After a sharp sell-off in the morning, it found support precisely at a key inclining trendline. However, the recovery was not robust, leaving price in an "area of contention" around the $380 to $381 USD level. The price action for the day formed a bearish flag pattern on the 10-minute chart.

This is where understanding the hierarchy of timeframes becomes critical. As Drew explained, a 10-minute pattern is far less formidable than a daily or weekly pattern. While it signals short-term weakness, it can be "broken and overcome much easier." The true line in the sand for SMH is the trendline support it bounced from. A definitive break below that level would open the door to the next major support at $363.71 USD. Conversely, if bulls can overcome the $381 USD resistance, the upside target remains the top of the parallel channel, near $420 USD.

The Memory Stock Crumble (STX & SNDK)

The memory chip sector displayed acute weakness. Seagate Technology (STX) provided a textbook example of a bearish reversal. A massive one-day gain of over 13% was completely erased in the following two sessions. This type of price action, where bulls are aggressively trapped, is a significant near-term warning. Like SMH, STX found its footing on a crucial trendline drawn from major pivot lows, but its ability to hold this level is now in question. A break would target support at $2.6810, with a larger target near $2.50 USD.

SanDisk (SNDK), which has exhibited meme-stock-like volatility, is also flashing warning signs. While a potential "MA" pattern on the 10-minute chart didn't fully play out with a sharp rejection, the hourly chart tells a clearer story: a bear flag. This classic continuation pattern—a sharp move down followed by weak, sideways-to-upward consolidation—suggests the next leg is likely lower. Key downside targets for SNDK are the support level around $305 USD and the significant gap fill at $273.64 USD.

Mega-Caps at Key Inflection Points (AVGO & NVDA)

Even the mega-cap leaders are facing tests. Broadcom (AVGO) is showing a sequence of technical breakdowns. After breaking a long-term trendline from April, it failed in its attempt to reclaim it and is now testing another, more immediate inclining trendline at $329.02 USD. A failure at this level would signal accelerating weakness, with the next support target at $308.98 USD.

NVIDIA (NVDA), while down on the day, is in a more constructive position. It is currently forming a bullish consolidation pattern, or bull flag, just below the 50% median line of its parallel channel. If this pattern resolves to the upside, a retest of the highs around $208.36 USD is probable. However, if the flag fails, traders should watch for a potential swing trading opportunity at a much lower level. Drew identified a powerful support zone around $153.13 USD, a level defined by multiple major pivot highs from late 2024. A sharp sell-off into this historically significant zone could provide a high-probability setup for a bounce.

The Universal Language of Trendlines

A recurring theme throughout today's analysis, across multiple unrelated assets, was the principle of trendline breaks and retests. We saw it in SMH, STX, and AVGO. This concept is a cornerstone of technical analysis for a reason: it reflects market psychology.

When a well-established trendline is broken, it signifies a potential shift in the balance between buyers and sellers. The subsequent move back to "test" that broken trendline is a critical moment of truth.

• If price is rejected at the old trendline (which now acts as resistance), it confirms the new trend is taking hold.
• If price manages to reclaim the trendline, the initial break is invalidated, often seen as a "fake out."

Understanding this dynamic allows traders to manage positions more effectively. A trendline break can be a signal to take partial profits or tighten a stop-loss. A successful retest can provide a new, lower-risk entry point to join the emerging trend. Drew's repeated application of this principle demonstrates its universal utility, whether on a 10-minute chart or a daily chart.

Commodities Corner: Energy Pushes, Metals Consolidate

The energy sector showed notable strength. U.S. Oil surged higher, running directly into a declining trendline that has served as resistance. However, the nature of this test is bullish. As Drew pointed out, the fact that price was rejected on Tuesday only to return and challenge the same level again on Thursday shows persistent buying pressure. This repeated knocking on the door often precedes a breakout. A clean move through this level would target the next resistance line, near $61 USD. Natural Gas, meanwhile, is consolidating within a strong zone of support between $3.04 and $3.30 USD. This area is a high-probability zone for a bounce, potentially carrying as high as the $3.70 USD resistance.

Precious metals are in a quieter consolidation phase. Gold is showing constructive action. Despite a dominant red candle from earlier in the week, the last three days have seen buyers step in whenever the price dips near $4,400 USD, creating bullish lower wicks on the candles. This suggests a base is being built for an attempt to push higher. Silver is attempting a similar consolidation but appears slightly weaker. If it can regain its footing and break the recent highs, upside targets sit at $87 and $89.40 USD.

Conclusion: Navigating a Market of Divergences

Today's market action underscores the importance of looking beneath the surface of the major indices. While the IWM made new all-time highs, pockets of significant weakness are developing in key technology sectors. The historical pattern analysis of Bitcoin provides a crucial long-term perspective, reminding us that even the strongest trends are subject to deep corrections.

By applying timeless technical principles—identifying key trendlines, understanding the hierarchy of timeframes, and recognizing classic patterns like flags and consolidations—traders can build a coherent narrative from seemingly chaotic price action. The setups in energy, the tests in mega-cap tech, and the warnings from the memory sector all provide a roadmap for risk and opportunity. As we head into next week, maintaining this disciplined, probability-based approach will be essential to successfully navigating a complex and divergent market.