Disclaimer: The information presented does not constitute financial, investment, trading or any other advice and is solely the opinion of the author
- The market structure was technically bullish.
- The failure to defend the former resistance at the bounce showed that it could have been a liquidity hunt.
US CPI data for April showed that inflation continued to fall. Markets expected annual inflation to remain at 5%, but data released Wednesday showed CPI rose 4.9%, the smallest 12-month increase since April 2021.
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The reaction in the cryptosphere was positive for a few short hours. Bitcoin [BTC] jumped back above the $27.8k resistance and pushed to $28.3k. This small bounce did not turn into a rally and at the time of writing, BTC was back below the same level of resistance.
Market structure breaking bull trap?
Source: BTC/USDT on TradingView
The 4-hour chart above showed a strong support zone in the $26.8k – $27.2k area. This was also an H4 bullish order block from late March. The jump above $27.8k on Wednesday broke the market structure and made a bullish turn.
Still, the buyers’ inability to defend the $27.8k level as support has been a cause for concern among the bulls. If buying pressure was high, why were the sellers able to wipe out profits so quickly?
The CMF showed a value of +0.07 to indicate the flow of capital to the market. Meanwhile, the RSI was below the neutral 50 showing that the downtrend was still ongoing.
Therefore, the RSI and the CMF are at odds, in addition to a bullish market structure. A trading session that falls below $27,262 on the 4-hour chart will see the structure turn bearish again.
As things stand, it may be prudent to wait for price action to develop. A BTC move above $28.2k or below $27.2k would likely highlight the direction of the crypto markets in the coming week.
Spot CVD saw a landslide and speculators turned bearish
Source: Coin analysis
Coinalyze’s 1-hour chart showed that Open Interest has risen over the past 12 hours, while prices slowly fell from the $27.8k level after retesting as resistance. This was a strong sign of bearish sentiment.
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In addition, the spot CVD was in a downward trend in May. Wednesday’s jump above $27.8k caused a small spike on the CVD.
The statistic slid sharply down after the ensuing selling push. The next level of support to watch out for is $26.8k, although $27.2k has also been significant over the past two days.