Key points:
Bitcoin hovers around the $120,000 level as traders enhance liquidity on both sides of the price point.
Analysis indicates bulls are addressing the “imbalance” to push the market higher.
Long-term bearish divergences persist, raising concerns about the Bitcoin bull market’s future.
Bitcoin (BTC) maintained support at $120,000 during Friday’s Wall Street opening as analysis readied for a new short squeeze.
Trader focuses on $123,000 BTC liquidity
Data from Cointelegraph Markets Pro and TradingView revealed a decrease in short-term BTC price volatility.
BTC/USD reached new local highs by the daily close, with the target now set at $121,100.
Commenting on the current market conditions, renowned trader CrypNuevo noted the overhead ask liquidity as a probable next target.
“Liquidations at $120k have been achieved,” he summarized in his latest analysis on X.
“Now we’re located in this Liquidity Pool (LP) which signifies an imbalance in the chart and necessitates full retracement ($123.2k).”
Data from CoinGlass further indicated bids clustering around $118,500, which could provide support if a market correction occurs.
Regarding a potential correction, well-known trader BitBull hypothesized that this might arise due to a rise in open interest (OI) in derivatives markets.
“In the upcoming 1-2 weeks, BTC and altcoins will experience a significant leverage flush,” he predicted in an X post.
“This will compel individuals to sell their coins as they believe that Uptober has concluded. Following that, Bitcoin and altcoins will rally again and reach new peaks.”
CoinGlass data reported total futures OI across exchanges at an all-time high of $88.7 billion for the day.
Bearish divergences raise alarms
Another indicator of potential trouble was highlighted by fellow trader Roman, who observed bearish relative strength index (RSI) divergences on both daily and weekly timeframes.
Related: What $110K gap? Bitcoin futures are ‘aggressively long’ as whales return
A bearish divergence occurs when the RSI registers lower highs while the price achieves higher highs — a situation currently evident in Bitcoin’s ongoing $124,500 record.
“I question how long $BTC can disregard these bearish divergences and low momentum on the 1W and 1M,” Roman inquired on Tuesday.
“Volume is also indicating a deficiency in strength. It’s only a matter of time before they manifest. Exercise caution holding here.”
As Cointelegraph previously reported, the four-hour RSI remains in “overbought” territory, reinforcing projections of low-timeframe price cooling.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
