The first half of July was marked by strong bullish momentum in Bitcoin, which, as anticipated, coincided with upward price movements across the broader cryptocurrency market. Bitcoin reached the $120,000 level—a milestone previously identified as a potential target for long positions in earlier analysis, well before the recent rally.

Following this upward move, however, momentum has shown signs of weakening, raising an important question among market participants: Is a correction underway, and if so, how deep could it extend?

Bitcoin technical analysis

BTCUSD - 4 Hour Time Frame

A central concept in this context is sell-side liquidity. The underlying principle is relatively straightforward: retail participants often become more active only after significant price increases. As a result, attention tends to focus on key price lows, below which a concentration of Stop Loss orders from late buyers may reside.

While entering the market following a strong rally is not inherently flawed, it becomes crucial to consider realistic scenarios for various entry points. A sound understanding of liquidity structures and typical stop placement could help navigate short-term volatility and mitigate emotionally driven decisions.

Bitcoin price target

For positions initiated above the $116,000 level, the risk-to-reward ratio (RRR) may be considerably less favorable compared to entries around, for example, $108,000.

Achieving a minimum RRR of 1:2 in such cases could require setting a Take Profit near $135,000, while the Stop Loss might need to be placed below the blue-marked support zone on the weekly timeframe. This approach typically involves a longer-term perspective and a higher tolerance for interim drawdowns.

Alternatively, for those not yet exposed to the market, waiting for a pullback into the identified blue support zone could offer a more favorable RRR—assuming entry conditions are met—and potentially provide a lower-cost entry point. This approach may align more closely with principles of disciplined capital deployment.

In broader terms, Bitcoin’s bullish structure remains intact as long as the blue weekly support zone holds. A breakdown of this zone, however, could indicate the beginning of a more significant corrective phase.