Bitcoin and crypto trading signals as the market cools off

The crypto market is pausing after a strong move higher, with Bitcoin, Ethereum, and several major altcoins all stalling under important resistance. Rather than a full-blown crash, current signals point to a short-term cool-off within a larger bullish trend. Here’s a clear breakdown of what’s happening, the key levels to watch, and how traders are positioning around Bitcoin, XRP, and other top coins.

Bitcoin’s bigger picture remains bullish

On the higher timeframes, Bitcoin still looks structurally strong. A key indicator on the weekly chart remains in a bullish mode, and a large bullish divergence has been in play since late June to early July, when Bitcoin was in the low $60,000s.

A bullish divergence happens when price makes lower lows or similar lows, but momentum indicators like the RSI make higher lows. On the weekly chart, this often signals the end of a bearish phase and the start of a longer-term uptrend. The last time a similar weekly bullish divergence appeared was at the end of the 2022 bear market, before a major multi-month rally.

Today, Bitcoin is forming higher highs and higher lows and has broken above previous range highs, which are now acting as support. From a trend perspective, that’s clearly bullish on the larger timeframes, even if the short term looks choppy.

Key Bitcoin resistance and support zones

On the 3-day chart, Bitcoin is still battling a major resistance zone between $86,000 and $88,000. This region has been the main ceiling for the current move.

Below the price, a strong support area has formed between $80,000 and $82,000. This used to be resistance and has now flipped into support, which is typical in an uptrend.

The base case expectation from here is a “cooling off” period that could last around one to two weeks: either a mild pullback or mostly sideways, choppy price action under resistance, followed by another attempt to break higher once the market has reset.

Bearish divergences signal a short-term cool-off

While the weekly structure is bullish, shorter timeframes are flashing warning signs in the form of bearish divergences.

On both the 3-day and daily Bitcoin charts, price has made higher highs, while the RSI has made lower highs. This bearish divergence typically signals weakening bullish momentum and often leads to a short-term pullback or sideways consolidation rather than an immediate continuation higher.

The expectation is not for a huge crash back to the lows, but rather a period of reduced momentum: smaller dips, sideways ranges, and a reset from overbought conditions before the larger uptrend resumes. This kind of choppy environment is similar to previous slowdowns seen during earlier stages of the current bull move.

Short-term Bitcoin price action and liquidity targets

On the 4-hour chart, Bitcoin has already pulled back from the $87,000–$88,000 resistance area and is now moving mostly sideways. This fits the idea of a short-term cooling phase under a major ceiling.

A liquidation heatmap highlights where clusters of leveraged positions are likely to be liquidated, often acting like magnets for price. Just below the current price, there is a significant pocket of liquidity around $82,700–$82,800, making this a highly probable short-term downside target. If that area is broken, the next notable liquidity zone sits around $80,700–$81,000.

Above the current price, smaller pockets of liquidity are forming near $85,300–$85,400 and a larger one around $87,400–$87,500. Given the active bearish divergences and rejection from resistance, it’s more likely in the near term that price sweeps some of the downside liquidity first, then later returns to test the upside levels as the larger uptrend continues.

When could Bitcoin break out again?

Assuming the cool-off plays out as expected and the bullish weekly structure holds, Bitcoin may later retest the $86,000–$88,000 resistance zone and potentially break above it.

If Bitcoin can close and hold above roughly $88,000, the next major upside target lies around $96,000–$98,000. That region would likely act as the next key resistance band in the ongoing bull trend.

This outlook lines up with the idea that the current period is a pause within an uptrend, not a trend reversal. For additional context on how similar setups have played out, you can also look at how other traders are approaching choppy conditions in new Bitcoin and crypto trade setups forming in a choppy market.

Why betting on a deep Bitcoin crash is risky

Some traders still expect Bitcoin to revisit much lower levels, such as the $50,000 range. While anything is technically possible, this view is currently fighting the dominant trend.

On the way down in a bear market, betting on immediate new all-time highs is usually a losing battle because it goes against the prevailing bearish structure. Today, the situation is reversed: the larger structure is bullish, and calling for a return to the lows means betting against a clear pattern of higher highs, higher lows, and bullish weekly signals.

That doesn’t rule out corrections or sharp dips, but a full reset to previous cycle lows is, based on current data, a lower-probability scenario.

Short-term trading vs long-term positioning on Bitcoin

In the short term, traders are mostly looking for a bit more downside or sideways action, potentially into the $82,000–$81,000 areas, before considering new long positions. Patience can offer better entries for larger swing trades.

One approach is to wait for the cool-off to deepen over the next several days to a week, then look for a swing long entry with low to moderate leverage, aiming to hold for weeks or even months into the next leg higher, potentially toward the $96,000–$98,000 range if the breakout above $88,000 occurs.

Bitcoin dominance: still a range-bound market

The Bitcoin dominance chart on the 3-day timeframe shows BTC’s share of the total crypto market cap moving sideways in a broad range for almost a year. Dominance has been oscillating between support and resistance, without a decisive trend toward either a strong Bitcoin-only market or a full-blown altcoin season.

This range-bound dominance reflects a market where Bitcoin and altcoins are broadly correlated, with only short-lived phases where one side briefly outperforms the other.

Ethereum mirrors Bitcoin’s resistance and divergence setup

Ethereum is showing a very similar pattern to Bitcoin. On the 3-day chart, ETH is struggling with a major resistance zone around $2,800. This level is roughly equivalent to Bitcoin’s $87,000 area in terms of market structure.

Like Bitcoin, Ethereum has been in a clear multi-month uptrend, with higher highs and higher lows and a significant shift in structure once it broke above prior highs. However, the daily chart now shows a confirmed bearish divergence: higher highs in price, but lower highs on the RSI.

This suggests a likely short-term phase of weakness or consolidation: mild pullbacks and sideways action rather than a major crash. The last time Ethereum had a similar daily bearish divergence, price mostly chopped sideways with modest dips before the uptrend resumed.

XRP: bearish divergence and a short-term short trade

XRP is currently trading in a range on the weekly chart, with key support around $1.30 and resistance between $1.60 and $1.70. On the daily chart, a bearish divergence has formed: price tested the highs again but failed to close above the previous peak, while RSI made a lower high.

This divergence remains active, signaling a likely short-term cool-off: either a small pullback or sideways price action with weaker bullish momentum. Even if XRP nudges slightly higher in the short term, the RSI would likely remain below its August peak, keeping the divergence in play.

Historically, XRP tends to underperform during market pullbacks or cool-off phases compared to Bitcoin and Ethereum, and then often shines during sharp bullish bursts or short squeezes. With Bitcoin and Ethereum already cooling off under resistance, this environment favors a modest downside move in XRP.

Example XRP short strategy

One trader approach highlighted in this setup is a relatively small XRP short position using leverage, targeting a short-term move down over the next few days to a week. This is not a bet on a long-term bear market for XRP, but on a probable short-term pullback driven by the active divergence and broader market cool-off.

An immediate support and potential partial take-profit zone is around $1.45–$1.47. A common tactic is to scale out rather than close the entire trade at once: for example, closing 20% of a $100,000 position at the first support, then another chunk at the next support if price continues lower, while moving the stop loss gradually into profit as the trade works.

This kind of scaling strategy helps lock in gains while keeping some exposure in case the move extends further than expected.

Solana: strong uptrend, but watching for a new divergence

Solana has been in a powerful uptrend and is currently testing a major resistance zone between $119 and $124, with the most active area around $120. Price is clearly struggling to break this band in the short term.

On the daily chart, Solana is close to confirming a fresh bearish divergence. Price has already closed at a new high, but the RSI has not yet confirmed a new lower high. If RSI rolls over and confirms that lower high, the divergence would signal a likely short-term cool-off: a modest pullback or sideways chop after the recent strong rally.

Even if Solana pushes a bit higher first, it’s very likely the RSI will still remain below its late August peak, which would eventually confirm some form of bearish divergence. As with Bitcoin and Ethereum, this would more likely mean a pause within a larger bullish trend rather than a trend reversal.

Chainlink: testing resistance with room for further upside

Chainlink (LINK) on the 3-day chart is currently pressing into a resistance band around $14.10–$14.30. Price is clearly reacting to this area and struggling to break through in the short term.

If LINK can close and hold above this zone, the next key upside target sits around $16.80, which would be the next significant resistance on the chart. However, as with other majors, a short-term cool-off is possible here—especially if Bitcoin and Ethereum continue to consolidate or pull back slightly.

The overall structure for Chainlink remains bullish, but traders should expect normal corrections and pauses around resistance rather than a straight line up.

Shorting, longing, and trading during a cool-off

The current market environment is defined by a strong higher-timeframe uptrend but short-term exhaustion signals. That combination can be ideal for active traders who know how to use both long and short positions, as well as strategies tailored to sideways markets.

Short positions can be used to profit from expected pullbacks in coins showing clear bearish divergences under resistance, like XRP or Solana. Long positions are better suited to swing entries near strong support once the cool-off has played out, particularly for Bitcoin and Ethereum. In between, range trading and grid strategies can help capture profits from choppy sideways action.

If you want a broader view of how warning signals and flows can influence these setups, it’s worth looking at how similar signals lined up with institutional activity in Bitcoin warning signal confirmed as ETFs see huge inflows.

What to watch in the coming days

Over the next several days to a couple of weeks, the market is likely to remain in a cool-off phase with these key themes:

• Bitcoin: watching the $82,700–$82,800 and $80,700–$81,000 liquidity zones below, and the $86,000–$88,000 resistance above. A sustained break above $88,000 would open the door toward $96,000–$98,000.

• Ethereum: monitoring price reaction under $2,800 and how long the daily bearish divergence keeps momentum capped.

• XRP: tracking the active daily bearish divergence and reactions around $1.45–$1.47 support as a potential short-term target for shorts.

• Solana and Chainlink: both testing resistance, with potential divergences and short-term pullbacks likely before any larger continuation higher.

Overall, the long-term trend remains bullish, but the near-term favors patience and tactical trading—taking advantage of pullbacks and ranges rather than chasing breakouts into overbought resistance.