- Bitcoin has a strong bullish bias this week.
- The recent dip could serve to increase liquidity and more volatility was likely.
Bitcoin [BTC] was trading at a high of $67 at the time of writing. This range has been available since mid-April. The momentum of recent days, especially the recovery above $65,000, convinced bulls that further gains were likely.
Other signals from the on-chain analysis pointed to bullish sentiment in the market. Still, liquidity in the $68,000-$69,000 region could see a bearish reversal. What are the chances that this scenario will occur?
How liquidity flows can be designed
Crypto analyst CrypNuevo pointed out in a post on X (formerly Twitter) that the $69,000 region is a large cluster of liquidation levels. This level could pick up prices in the coming days, but it could come with some volatility.
The idea is that a sharp, rapid downward move before this big liquidity pocket is hit could encourage more short positions. It could also create false confidence among traders who are already short, building even more liquidity around the $69,000 region.
He also pointed out that these aggressive moves occur at the beginning of the week. The 50-EMA on the 4-hour chart at $65k was another potential support for Bitcoin. Such a deep drop could encourage even more short selling.
However, the liquidation heatmap showed the $68.6k-$69.2k as a critical resistance zone. The analyst expects a drop to $65,000 this week, followed by a rally to $69,000.
What does the four-hour technical analysis reveal?
Source: BTC/USDT on TradingView
The fourth-half RSI continued to rise above the neutral 50 level, indicating strong bullish momentum. Still, BTC trading volume has been low since Friday. However, the OBV was on the verge of breaking a local resistance level, which could add to the bullish momentum.
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The 4-hour chart showed strong resistance at $69k-$69.5k, but short liquidations could trigger a rise past this tricky resistance zone.
So, traders should be prepared for some volatility, but this week the bullish progress continued.
Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.