Possible Bitcoin Bull Trap! I use 3 indicators as evidence to show how this will play out – BTC TA
Bitcoin: a bull trap may be ahead
Bitcoin has been actively strengthening since March 13.
The price approached the upper border of the Bollinger Band and almost reached the 200-day MA.
Previously, in similar situations, the currency then fell rapidly.
After reaching a low of $ 3,760 on March 13, Bitcoin was actively growing and at the moment has strengthened from the above minimum by 94%.
However, even these impressive indicators could not convince everyone that the BTC rate has already reached the bottom. Such distrustful participants in the crypto market include, in particular, the trader il Capo Of Crypto (@CryptoCapo).
He shared on Twitter a chart for bitcoin reflecting the price dynamics of the currency since 2017..
This time is different… right? pic.twitter.com/VmYVX2YrVc
– il Capo Of Crypto (@CryptoCapo_) April 9, 2020
On the chart, Capo highlighted eight moments when the price first rose aggressively, but then fell rapidly. Based on this, he suggests that the current rally will also end with a similar decline..
Bull traps in 2018
The first three such traps for bulls on the BTC chart can be distinguished in February, April and July 2018..
Each of these episodes has certain common characteristics:
- Growth rates exceeded 50 °.
- The high preceding the bearish breakout was set outside the upper border of the Bollinger Band.
- After the bearish breakout, the retracement was 100%.
In addition, April and June price dynamics are united by another similarity..
The market formed a maximum both times, coinciding with the 200-day moving average (MA). However, this coincidence was not observed in February..
2018 to present
Since the beginning of 2019, 4 more similar patterns have appeared on the chart – in July and October 2019, as well as in January and March 2020..
January price behavior is fundamentally different from the rest of the episodes.
The slope here is much less than 50, and the price has not managed to pierce the upper border of the Bollinger Band. Based on this, we decided to disregard this pattern..
As for the remaining three, they all correspond to the highlighted general characteristics, including extremely aggressive rallies and the final highs marked above the upper border of the Bollinger Band..
If Bitcoin strengthens by another 5% now, the price will again be above this line and test the 200-day MA as resistance. As we saw above, this may turn out to be the final chord, and after reaching this maximum, the pair may begin to fall, as it was in previous cases..
Thus, the current phase of bitcoin growth, which began on March 13, has a number of similarities with previous bull traps that caused the price to fall..
BTC is likely to peak around $ 7,900 where it will also test the 200-day MA.
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