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Bitcoin’s recent price action reveals multiple bearish divergences across key timeframes, signaling potential challenges ahead for sustaining rallies above $110,000.
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Despite optimism among some traders anticipating a breakout beyond $112,000, technical indicators and sell-side liquidity sweeps suggest these moves may be traps rather than genuine upward momentum.
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According to COINOTAG analysis, the persistent bearish divergence coupled with neutral funding rates highlights cautious market sentiment, indicating that bulls may struggle to maintain control in the near term.
Bitcoin faces bearish divergences on multiple charts, hinting at weak bullish momentum and potential pullbacks despite attempts to break $110,000 resistance.
Technical Indicators Signal Bitcoin’s Bullish Momentum Weakening Near $110,000 Resistance
Bitcoin’s price surge to $110,500 was met with significant resistance, as reflected by bearish divergences on the 15-minute, one-hour, four-hour, and daily charts. These divergences occur when price action continues upward while momentum indicators like the Relative Strength Index (RSI) trend downward, suggesting that the rally lacks strong conviction. This technical setup often precedes price corrections or consolidations, implying that the current bullish momentum may be unsustainable in the short term.
On the daily chart, the divergence that emerged around Bitcoin’s all-time high near $111,800 remains intact, reinforcing the possibility of a retracement toward support levels between $106,000 and $107,500. The recent US Non-Farm Payroll report, which initially boosted Bitcoin’s price, failed to sustain the breakout above $110,000, highlighting the psychological significance of this resistance zone. Traders should closely monitor these levels for signs of either a confirmed breakout or a reversal.
Neutral Funding Rates Reflect Market Uncertainty Amid Divergent Price Signals
Funding rates for Bitcoin perpetual futures contracts have remained relatively flat, indicating a balanced sentiment between long and short positions. Vetle Lunde of K33 Research noted that despite Bitcoin approaching its all-time high range, the absence of aggressive long positioning suggests traders are hesitant to commit fully to a sustained rally. This neutrality in funding rates complements the bearish divergences observed in price momentum, underscoring a cautious market environment where participants await clearer directional cues.
Liquidity Sweeps and Sell Pressure Indicate Potential Bull Trap Above Key Resistance
Market data reveals a pattern of liquidity sweeps above resistance levels near $110,000, where Bitcoin briefly breaches these zones only to reverse sharply. Such moves often serve to trigger stop-loss orders and liquidate leveraged long positions, effectively trapping bullish traders. The clustering of high-taker sell volume around this price point further supports the notion that sellers are actively defending this resistance, potentially setting the stage for a pullback.
Pseudonymous trader Byzantine General highlighted futures market data suggesting a possible $112,000 breakout, driven by rising open interest. However, this optimism is tempered by the observed sell-side liquidity and the recurring fakeouts noted by trader KillaXBT. These dynamics illustrate the complex interplay between bullish setups and bearish traps, emphasizing the importance of cautious risk management during this consolidation phase.
Market Outlook: Navigating Between Bullish Potential and Bearish Risks
As Bitcoin consolidates near critical resistance, traders face a bifurcated outlook. On one hand, the potential for a breakout above $112,000 exists if momentum and open interest align favorably. On the other hand, persistent bearish divergences, neutral funding rates, and liquidity sweeps suggest that the current rally may be vulnerable to a corrective phase. Market participants should prioritize monitoring volume patterns, funding rates, and momentum indicators to better gauge the sustainability of any upward moves.
Conclusion
Bitcoin’s recent price behavior near $110,000 is characterized by conflicting signals: technical bearish divergences and neutral funding rates indicate weakening bullish momentum, while futures data and open interest hint at possible upside. The presence of liquidity sweeps and sell pressure around key resistance levels suggests caution is warranted, as these could represent traps for overly optimistic traders. Maintaining disciplined risk management and closely observing market indicators will be essential for navigating Bitcoin’s near-term price action.
