What Causes Bulge In Knee After Twisting It Accidentally?

Last Sunday I was playing soccer and I twisted my knee. The injury happened as i was bumped in mid-air and lost my footing. When I landed, I twisted my right knee and heard a pretty loud crack. My knee hurt for a couple days and limited my mobility, but now I can walk with a minor limp. I am able to bend my knee back but I can't straighten it out completely. Yesterday I noticed on the side of my knee a bulge when I bend it. The bulge is not really big but when I touch it it's rather soft and squishy. Is it possible that there is liquid in my knee as a result of the injury or waht can it be?