Bitcoin is flashing warning signs despite local uptrend

Liquidation levels could be key in terms of driving the next move. Let's dive into the local and more major levels.

TLDR

• BTC is trapped between $35.6K support and $38K resistance in a tight range.
• Bearish RSI divergence on higher timeframes signals potential pullback.
• If the uptrend line breaks, key $35.6K support must hold to avoid the $34K target.
• Watch out for volatility on breakouts above or below key levels.

Disclaimer: Not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results. “One Glance” by Cryptonary sometimes uses the RR trading tool to help you quickly understand our analysis. They are not signals, and they are not financial advice.

Macro analysis

• Markets will await tomorrow’s GDP data, which is expected to come in at 5.0%, well above the last reading of 2.1%.
• The Nasdaq and S&P were relatively unchanged yesterday, whilst the DXY put in a new low. The Nasdaq and S&P are at highs, whilst the DXY is at lows, close to oversold territory, putting in a bullish divergence yesterday. Could a relief rally in the DXY suppress risk assets in the short term?  

Let’s now dive into the technicals for BTC. 

BTC 12hr

Technical analysis

• Bitcoin has found a local level of support at $37,000.
• Bitcoin remains inside the local uptrend. Price can move higher as long as price remains in trend. Beneath the trend, we’ll likely see a more significant downside. 
• If the uptrend line is broken, then the horizontal support of $35,600 will need to hold; otherwise, the next target is likely to be $34,000. We would be DCA buyers of Bitcoin at $34,000. 
• The RSI has reset on all timeframes except the 3D and the Weekly, which both remain overbought, with the 3D also having put in a bearish divergence. This is something we have to be careful and wary of. 

From a TA perspective, Bitcoin looks somewhat exhausted to the upside despite the lower timeframes indicators resetting. We still see a more significant pullback as likely, with a potential target of $34,000. 

Market mechanics

• The Open Interest in Bitcoin has moved slightly to new highs of $16.90b.  
• The OI-Weighted Funding Rate has been range-bound between 0.008% and 0.010%. This indicates that Longs and Shorts are in even balance. When there is a balance, each side (Long or Short) is less vulnerable to a squeeze, and therefore, there isn’t a side to take advantage of. Hence, we steer clear of short-term trades. 
• The liquidation levels are interesting. On the smaller timeframes, $36,600 would liquidate a large amount of Longs, whilst $37,500 would liquidate Shorts. 
• The largest level of liquidation is at $34,000. This would liquidate a large amount of USD Longs. 

The Mechanics don’t give us an edge here as the market has a fair amount of leverage, but neither side (Longs or Shorts) are meaningfully offside. We have a close eye on that liquidation level at $34,000. We expect market makers and exchanges to hunt this level.  

Cryptonary’s take

Bitcoin remains in the key range behind $35,600 and $38,000. We expect volatility on any key break of the range with the move confirmed with significant candle closures. 

Bitcoin has put in a bearish divergence on the 3D timeframe, which we feel can’t be ignored, particularly when Bitcoin is up 36% in 6 weeks. We see a more meaningful pullback on the cards to, say, $34,000. Market makers and exchanges will likely hunt this level if price does fall below the uptrend line and then the key support at $35,600. 

We would be DCA buyers of BTC at $34,000 down to $33,000. If we see $31,000 to $33,000, that’s where we’ll be more aggressive with our DCA buys.