After Bull trap: Short term downtrend continues
Updated
The perfect bull trap occurred in BTC:
After several hours of sideways movement in a tight range of 150 points, BTC broke the short term downtrend channel, and pushed higher.
This was followed by a pullback and another move up which just made a new high 11.970.
At this point many traders might go long, since we had several "confirmations" of a new imminent upmove.
But when it turns down right away and breaks strong support at 11700 the bull trap had forced many longs out of their positions, if they had stops below that support.
How to trade the trap then?
If you see the trap beginning, that would be the bearish candle from 11.970 below 11.900, you could go short below 11.900.
What is happening now? New Short entry ahead?
Bitcoin has made nearly two legs down inside the short term downtrend channel. If prices move up to 11.550, right back to the upper trendline, we might get another push down to 11.100.
After several hours of sideways movement in a tight range of 150 points, BTC broke the short term downtrend channel, and pushed higher.
This was followed by a pullback and another move up which just made a new high 11.970.
At this point many traders might go long, since we had several "confirmations" of a new imminent upmove.
But when it turns down right away and breaks strong support at 11700 the bull trap had forced many longs out of their positions, if they had stops below that support.
How to trade the trap then?
If you see the trap beginning, that would be the bearish candle from 11.970 below 11.900, you could go short below 11.900.
What is happening now? New Short entry ahead?
Bitcoin has made nearly two legs down inside the short term downtrend channel. If prices move up to 11.550, right back to the upper trendline, we might get another push down to 11.100.
Note
Prices just hit my target at 11.100, quicker than expected. BTC made a little double top at 11.470 and then pushed lower to 11.080. At this area there could have been some breakeven stops from the longs who got in at this price (see my posting yesterday "Upmove inside...". Markets tend to get these stops ;)Prices bounced quickly 200 points from there, but the downtrend is still in play.
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