bitcoin Faces Bearish Signals Amidst Rally Near $110,000

Key Insights on bitcoin‘s Current Market Dynamics

• bitcoin is exhibiting bearish divergences across various time frames, indicating a potential decrease in bullish momentum and the likelihood of a price pullback.
• While some traders are optimistic about a surge past $112,000, rising selling pressure and liquidity sweeps suggest that recent breakouts may be deceptive.

bitcoin (BTC) surged to approximately $110,500 on Thursday, but it is now hitting resistance as bearish divergences appear across multiple time frames.

Technical analysts have identified divergence signals on the 15-minute, one-hour, and four-hour charts, where bitcoin‘s price continues to rise while momentum indicators, such as the relative strength index, trend downward. This scenario points to a weakening bullish trend, increasing the chances of a short-term price correction.

Analyzing the Longer-Term Outlook

Looking at the one-day chart, the cautious sentiment is further supported. A notable bearish divergence was observed in May, coinciding with bitcoin‘s peak at $111,800. Although the price briefly dipped below $100,000 afterward, the divergence remains, suggesting that underlying bearish forces could still be at play. The immediate support levels to watch are between $107,500 and $106,000.

This bearish sentiment was reinforced following the release of Friday’s US Non-Farm Payroll (NFP) data, which exceeded expectations. Although the labor report initially propelled BTC toward $110,000, bulls struggled to maintain momentum, leading to a rejection at this critical psychological level, indicating potential exhaustion at current highs.

Interestingly, funding rates are currently neutral. Vetle Lunde from K33 Research noted that the perpetual futures funding rate remains stable, even as BTC approaches its all-time high range. This lack of aggressive long positions suggests that traders may not be fully convinced of a sustained breakout, which aligns with the observed technical divergences.

Is bitcoin‘s Recent Rally a Bullish or Bearish Trap?

As bitcoin stabilizes just below the $110,000 mark, traders are divided on the next significant movement.

The pseudonymous trader Byzantine General shared insights indicating that bitcoin might be preparing for a breakout above $112,000, based on futures data. This setup implies that open interest could rise alongside the price, which historically has led to higher targets.

However, market order books are beginning to show increased selling pressure. A significant volume of sell orders has emerged around the $110,000 level, typically indicating that investors may be closing positions at resistance points. This behavior mirrors past trends near previous all-time highs, where rejection zones often attract liquidity for exits.

Meanwhile, trader KillaXBT highlighted that bitcoin has been executing liquidity sweeps above resistance and below support levels, only to reverse quickly. Such fakeouts are often designed to flush out leveraged positions before a genuine directional move occurs.

Conclusion

The current market dynamics surrounding bitcoin suggest a complex interplay of bullish and bearish signals. As traders navigate this landscape, the potential for significant price movements remains, but caution is warranted given the prevailing bearish divergences and selling pressure.

This article does not constitute investment advice. All trading and investment activities carry risks, and readers are encouraged to conduct their own research before making decisions.

Disclaimer: This article is provided for informational purposes only and does not constitute financial advice. Readers are encouraged to conduct their own research before making any investment decisions.