BTC has made another bulltrap, only this time at the bottom of the broader range (see also my last post about the first bulltrap).
How to avoid this trap and profit from it?
When prices hit the lower trendline of the broad range at 10800 the early longs stepped in and it quickly bounced to the former support 11080.
This was the first leg up inside the downtrend channel, tuning down again exactly at the breakout level (11080).
Now it looks bearish again, right? No, often there will be another equal leg up, because it traps longs in an pushes shorts out.
BTC broke the downtrend line and mad a new higher high at 11.150.
Now it is time buy, right? No, a classic little trap for the bulls, just go short!
Always think about what could the market do to throw people off ... only to continue in the trend direction (down).
Now it was time to put pressure on the early longs and go for their stops. So you could justify another short below 11000 when it turned down at the EMA and trendline again.
Everyone who got aggressively long at the 10800-900 area had to see their stops being taken out by a fast and strong downmove to the next support level around 10300.
Right now prices are likely to bounce back to at least 10500 or even 10800, so to cover (some) of a short position at 10300 is a legit option.
The downtrend cannot be declared over, a real reversal will take some time imho...
How to avoid this trap and profit from it?
When prices hit the lower trendline of the broad range at 10800 the early longs stepped in and it quickly bounced to the former support 11080.
This was the first leg up inside the downtrend channel, tuning down again exactly at the breakout level (11080).
Now it looks bearish again, right? No, often there will be another equal leg up, because it traps longs in an pushes shorts out.
BTC broke the downtrend line and mad a new higher high at 11.150.
Now it is time buy, right? No, a classic little trap for the bulls, just go short!
Always think about what could the market do to throw people off ... only to continue in the trend direction (down).
Now it was time to put pressure on the early longs and go for their stops. So you could justify another short below 11000 when it turned down at the EMA and trendline again.
Everyone who got aggressively long at the 10800-900 area had to see their stops being taken out by a fast and strong downmove to the next support level around 10300.
Right now prices are likely to bounce back to at least 10500 or even 10800, so to cover (some) of a short position at 10300 is a legit option.
The downtrend cannot be declared over, a real reversal will take some time imho...
