Bitcoin is facing resistance after bearish divergences appear

The key takeaways

• Bitcoin’s divergence is bearish on several time frames. This signals a lack of bullish momentum, and the possibility of a possible pullback.

• Some traders expect a rally over $112,000 but increased sell pressure and liquidity sweeps indicate that the breakouts may be traps.

BitcoinBTCThe price of climbed to $110 500 on Thursday. However, the crypto is hitting a wall as several bearish divergences appear across multiple timeframes.

Technical analysts on 15-minute and 4-hour charts have noted divergence signs, in which the price rises while momentum indicators like the relative strength indicator trend downward. It suggests that the bullish trend is fading, which increases the chances of a pullback in near term.

Zooming into the daily chart confirms the cautionary outlook. A clear divergence between the price and momentum indicator was evident in May. This coincided with Bitcoin’s record high of $111 800. BTC’s price has since briefly fallen below $100,000 but this divergence still remains, indicating that the underlying pressure to sell is likely to continue. Targets below are between $106,500 and $107,500.

The US Non-Farm Payroll data (NFP), released on Friday, reinforced this bearish sentiment. data, It was hotter than anticipated. Bulls were unable to sustain the $110,000 breakout that was initially triggered by the Labor Report. Rejection at this psychologically important level could signal the exhaustion of current highs.

Interestingly, funding rates remain neutral. Vetle Lunde from K33 Research wrote an article on X. pointed Even though BTC is nearing its record high, the rate of perpetual futures financing remains at a flat level. It is possible that the lack of aggressive positions on longs shows traders have not been convinced by a breakout.

Related: Bitcoin price rallied 80% the last time BTC funding rates flipped red

Bitcoin’s rise to $110,000 was it a bull trap or a bear trap?

Bitcoin is consolidating just under the $110,000 mark, but traders have different opinions on when the price will move. 

Pseudonymous trader Byzantine General shared A chart indicating that Bitcoin could be heading for an $112,000 breakout based on data from futures. It is possible that the open interest will break out at the same time as price. In past years, this has always led to an increase in target. 

The following are some of the ways to get in touch with us market order books Increasing sell pressure is beginning to be reflected in the market. Around the $110,000 area, a cluster of large-volume sellers appeared. This is usually a sign investors are closing their positions. It is consistent with the recent behaviour near all-time highs where there are often rejection zones that attract liquidity.

Meanwhile, trader KillaXBT pointed Bitcoin is executing liquid sweeps over resistance and under supports. Then it reverses quickly. These fakeouts can be used to remove leveraged trades before the real direction is revealed.

Related: Bitcoin holding $109K proves bulls control the market: Will new highs happen today?

The article is not intended to provide investment advice. Risk is inherent in every investment decision and trade. The reader should always do research prior to making their final choice.