Bitcoin Accumulation Wedge or Bull Trap
Updated
Yesterday i talked about the possible danger of a wedge bull trap. I was ready to let go of the bull trap idea when it broke the 17.800ish, but with yesterday's dump it got reanimated again. I talked about the scenario like we saw earlier this year at the 10K in Jan/Feb. If you might remember, where i turned bearish when the bull trap was becoming more clear. Here below you can see that bull trap (yellow circle). The orange area can be ignored, because that was an exceptional period and is NOT what a bull trap like this means. But a drop between the yellow and orange is likely if the bull trap becomes real.
The one here below is also an example of a successful accumulation wedge. So the pattern for a successful one is that after the breakout it stays clearly above the wedge and fairly quickly continues to rally much more.
As you can see, I have drawn a red and black line. The black shows what bulls want to see (assuming we don't rally already coming day or so). Which means, even if it drops, it drops slowly and small steps, possibly even inside a channel (which i have also drawn). The bearish version (red line), would need a much faster and bigger drop towards the highs of the wedge.
What i wrote yesterday in my free channel (around 17.700 before the pump to 18K+):
Think now bitcoin has reached a level where things are going too fast. 2 options here, either it’s super strong and this is just the beginning, or it’s like we have seen countless times past years, greed is kicking in and a correction is near. Technically I would say, it broke up from that wedge, so either it was accumulation and we continue to squeeze up. Or it’s a stop hunt shake out, if we move up and down coming day or 2 between 17.6k and 16.8k, then I think a big drop is likely. Very similar to feb this year around the 10k. So it’s a wait and see situation for now, because for now I don’t see anything to suggest the bearish version will play out.
It's very similar to what i just said (followers know what i said), bulls need to prevent a drop back in that wedge, because if that happens, chances for a bigger correction increase a lot. But more importantly, chances for a big drop will also be in play again. This because of the bull trap pattern.
In other words, for now, any bearish scenario's are very unlikely to me, because of the extreme strength it has shown so far. But a bull trap is a bull trap, because where a slower rally with bigger consolidations give a much better foundation for the rally. But when things go too fast too high, danger of massive profit taking (and shorting of bears) and stop hunting is so much bigger.
Level i mentioned yesterday as well was 17.200/300, then getting confirmed with that dump from 18K and bouncing up from that level again, so confirming it. So short term, think its very important for the bulls to hold that zone for the coming day or 2 maybe. Then comes 16.800 as a support and when that breaks, the support line of the wedge is also an important level, currently around 16.400/500. When all those break, the green zone around 16.000 is what probably prevents a drop towards what i think the key support zone of this whole rally, around 14K.
So even if the bull trap plays out, as long as we don't see massive dumps and prices stays above the 14Kish, chances for a continuation of the bull trend are much higher. A break of the 13K zone, i will most likely turn bearish again.
Short term, 17.200ish is a big level for the bulls to hold. On the upside, think if 18.300ish breaks, good chance we continue to go up more.
While i am writing this the 17.800 broke and it dropped some more since, but so far no dump yet.
Don't forget to give a like if you appreciate my efforts :)
Previous analysis:
The one here below is also an example of a successful accumulation wedge. So the pattern for a successful one is that after the breakout it stays clearly above the wedge and fairly quickly continues to rally much more.
As you can see, I have drawn a red and black line. The black shows what bulls want to see (assuming we don't rally already coming day or so). Which means, even if it drops, it drops slowly and small steps, possibly even inside a channel (which i have also drawn). The bearish version (red line), would need a much faster and bigger drop towards the highs of the wedge.
What i wrote yesterday in my free channel (around 17.700 before the pump to 18K+):
Think now bitcoin has reached a level where things are going too fast. 2 options here, either it’s super strong and this is just the beginning, or it’s like we have seen countless times past years, greed is kicking in and a correction is near. Technically I would say, it broke up from that wedge, so either it was accumulation and we continue to squeeze up. Or it’s a stop hunt shake out, if we move up and down coming day or 2 between 17.6k and 16.8k, then I think a big drop is likely. Very similar to feb this year around the 10k. So it’s a wait and see situation for now, because for now I don’t see anything to suggest the bearish version will play out.
It's very similar to what i just said (followers know what i said), bulls need to prevent a drop back in that wedge, because if that happens, chances for a bigger correction increase a lot. But more importantly, chances for a big drop will also be in play again. This because of the bull trap pattern.
In other words, for now, any bearish scenario's are very unlikely to me, because of the extreme strength it has shown so far. But a bull trap is a bull trap, because where a slower rally with bigger consolidations give a much better foundation for the rally. But when things go too fast too high, danger of massive profit taking (and shorting of bears) and stop hunting is so much bigger.
Level i mentioned yesterday as well was 17.200/300, then getting confirmed with that dump from 18K and bouncing up from that level again, so confirming it. So short term, think its very important for the bulls to hold that zone for the coming day or 2 maybe. Then comes 16.800 as a support and when that breaks, the support line of the wedge is also an important level, currently around 16.400/500. When all those break, the green zone around 16.000 is what probably prevents a drop towards what i think the key support zone of this whole rally, around 14K.
So even if the bull trap plays out, as long as we don't see massive dumps and prices stays above the 14Kish, chances for a continuation of the bull trend are much higher. A break of the 13K zone, i will most likely turn bearish again.
Short term, 17.200ish is a big level for the bulls to hold. On the upside, think if 18.300ish breaks, good chance we continue to go up more.
While i am writing this the 17.800 broke and it dropped some more since, but so far no dump yet.
Don't forget to give a like if you appreciate my efforts :)
Previous analysis:
Note
Where at first it looked like it was following the bearish short term version just after i posted my analysis, once again it bounced up from the 17300ish. The it started to look like a H&S, ugly one, but after breaking that neckline around 17.600, the drop was fairly small. But more importantly, look at how low the volume was on that drop. This is usually a hidden sign, that whether we drop from current prices, as long as we don't see a huge dump, the trend is probably still up.
So at this point, i tend to think that maybe the version i mentioned yesterday to my followers, is maybe see a low volume rally towards 19K before a correction starts.
Also, so far it seems to be moving inside of a channel, actually the version i mentioned yesterday (the black line). So therefore, i think the bulls have the upper hand for now.
Note
New Bitcoin analysis
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.