Bitcoin faces resistance as bearish divergences emerge

Takeaways from the conference:

• Bitcoin has bearish divergences in multiple timeframes, indicating a weakening bullish trend and potential for a pullback.

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

BitcoinBTC() rose to $105,500 on Friday, but is now hitting a limit as bearish divergences are flashing across various 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. The divergence signals indicate a weakening of the bullish momentum, increasing the likelihood of a short-term correction.

Zooming into the daily chart confirms this cautious 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 briefly fallen below $100,000 but this divergence still remains, indicating that the underlying pressure to bear continues. The target for the immediate future is between $107500 and $106,000.

After Friday’s US Non-Farm Payroll, this bearish bias has been reinforced. data, It was hotter than anticipated. The labor report helped BTC initially reach $110,000 but bulls have failed to hold that breakthrough. This rejection may be a sign of exhaustion for the range’s 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 surge to $110,000 on Friday was a trap for bulls or bears?

Bitcoin traders are divided on what the next major move will be as Bitcoin settles just below $110,000. 

Pseudonymous trader Byzantine General shared A chart indicating that Bitcoin could be preparing to break $112,000 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. The $110,000 region was a hotbed of sell volumes from high takers, which is a good indication that investors may be exiting positions. The behavior is similar to recent trends near past all-time peaks, when rejection zones are often where liquidity flows out.

Meanwhile, trader KillaXBT pointed Bitcoin is executing liquid sweeps over resistance and under supports. Then it reverses quickly. The fakeouts often aim to get rid of leveraged positions prior to a true directional movement.

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.