Immutable (IMX) has displayed a strong bullish momentum recently, with a notable 26% rally over just two days, signaling increased market interest. Despite the short-term bullish outlook, however, technical indicators suggest that profit-taking might be a prudent strategy for traders in the current market conditions.

IMX’s Price Action and Range Formation

IMX’s price action has formed a clear range, extending from $0.37 to $0.71. Within this range, several key price levels have emerged as crucial support and resistance zones. The mid-range level at $0.545 acted as both support and resistance toward the end of March. Recently, IMX has managed to break above this level, highlighting a shift in market sentiment. However, despite the rally, the overall structure remains range-bound, with price action contained within these well-defined levels.

The current resistance zone for IMX is between $0.71 and $0.76. This level has been a key area for price reversals in the past. As such, breaking through this zone and turning it into support is essential for establishing a stronger bullish trend. Until then, traders should expect the range to hold, with the possibility of pullbacks within the defined price structure.

Short-Term Bullish Momentum and Potential Pullbacks

IMX has been rallying strongly since mid-April, but its current price action shows signs of consolidation. While the recent surge in price has been impressive, there is the possibility of a pullback to the lower end of the range. A dip to $0.53 seems likely before the price attempts another rally toward $0.71. Such pullbacks are common in range-bound markets and often present opportunities for traders to re-enter at a better price.

It is essential to monitor the $0.71-$0.76 resistance zone closely. Given the previous price reversals at these levels, traders should be cautious and prepared for a potential bearish reversal. If IMX struggles to break through these resistance levels, a return to the lower range of $0.53 may occur. This would be a natural move within the context of the ongoing range formation.

Indicators and Market Sentiment

Several technical indicators suggest that while IMX is currently experiencing bullish momentum, there are underlying concerns that could hinder further gains. The Chaikin Money Flow (CMF) indicator has been reading negatively, below -0.05, indicating that there has been heavy capital outflow from the market. This could signal weakening bullish strength, despite the rally. It’s also important to note that the Awesome Oscillator has shown a bullish crossover, and the On-Balance Volume (OBV) has risen above the local highs from March. These indicators suggest that there is still some bullish strength, though it is not enough to confidently predict a breakout past the $0.71 resistance.

Liquidity and Profit-Taking Levels

The 1-week liquidation heatmap also reveals key price levels that traders should pay attention to. A significant cluster of liquidation levels is found around $0.575 and $0.53, which could act as short-term price targets for IMX. Should the price dip to these levels, traders might look to take profits, as these zones may serve as areas of support in a broader uptrend.

Furthermore, the 1-month and 3-month liquidation heatmaps show that the $0.69-$0.7 and $0.76 levels are important liquidity pockets. These levels align with local highs and are strong areas where IMX could face a bearish reversal. Traders should consider taking profits as IMX approaches these levels, especially since these are key resistance points.

Conclusion

While Immutable (IMX) has been showing strong short-term bullish momentum, traders should be cautious of potential pullbacks, especially as the asset nears critical resistance levels. Given the range-bound nature of the current market, it may be wise for traders to take profits at key resistance zones and wait for a retest of support levels to re-enter long positions. By staying aware of market conditions and using these key price levels as guides, traders can maximize their potential gains while mitigating risks.