Bitcoin (BTC) failed again to break out of a tight trading range on April 6, while the $28,000 level hung by a thread again.
Traders “compress” the price of BTC
Data from Cointelegraph Markets Pro and TradingView showed that the BTC/USD pair was trading below $28,000 at the time of writing.
The pair had approached $29,000 the day before, reducing liquidity in what analysts called a “choreographed” movement by the whales.
That seemed to be true, since the bullish momentum soon faded and the spot price remained in an ever narrowing range.
The liquidity cloud around USD 30,000 was still untestedmuch to the frustration of those who expected an easy continuation of the 2023 rise.
In a follow up comment, Material Indicators noted that traders had shifted buying and selling liquidity, “compressing” the likely zone of spot price movement.
“Liquidity cushions volatility,” he summarized.
Liquidity dampens volatility. #FireCharts shows both sides seem to be moving #BTC liquidity closer to the active trading zone, effectively compressing the range. Gaps that don’t get filled in or defended with buy/sell walls are prone to be exploited…and yes, that means both… pic.twitter.com/3ZDrfJeaVh
— Material Indicators (@MI_Algos) April 5, 2023
Liquidity cushions volatility. FireCharts shows that both sides appear to be moving BTC liquidity closer to the active trading zone, effectively compressing the range. Gaps that are not filled or defended with buy/sell walls are prone to being exploited… and yes, that means both…
Considering what the outcome of current price action could be in short timeframes, analytics resource Skew devised two outcomes.
He described the BTC/USD pair as a “crab” – moving sideways – with little room for maneuver.
$BTC 4H
Not much changed, still crabbing in tight 4H rangePrice struggling to sustain above 1D range high; usually implies one of two outcomes:
1. Grind with EMA trend (compression before expansion) / hold 4H range low
2. bleed towards 1D range low & breakdown occurs there. https://t.co/n76XG7Z6io pic.twitter.com/rJ2dEE14O0
— Skew Δ (@52kskew) April 6, 2023
BTC hasn’t changed much; it continues to move in a tight 4-hour range. The price struggles to stay above the high of the 1-day range; This usually involves one of two outcomes: 1. Trend following the EMA (compression before expansion) / holding the low of the 4 hour range. 2. Bleed towards the low of the 1-day range and break out there.
A “double top” formation could be underway
Meanwhile, the trader and analyst Rekt Capital saw a drop to $27,000 as a potential sign that a long-term “double top” formation is underway.
“The recent rejection of BTC from the Double Top resistance means that BTC could still drop from here to complete the second part of the formation,” tweeted that day along with an explanatory chart.
“Typically, Double Tops resemble an ‘M’ shape, so the second part of the pattern would form with a drop to ~$27,000 (blue).”
Others remained optimistic about bitcoin’s path into the new year.
After such a strong start, the trader and analyst Credible Crypto reaffirmed its prediction that the BTC/USD pair would reach a new all-time high in 2023.
“A drop to $23,000-25,000 that I’ve been talking about for weeks doesn’t change any of that. It’s nothing to worry about,” He said part of the recent comment.
Previously, Cointelegraph reported calculations pointing to another double bull top for bitcoin in 2025, potentially above $200,000.
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