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Beartrap

Euro Technical Analysis: EUR/USD Stalls Inside of Yearly HighEUR/USD has put in a very bullish outlay so far in Q3 trade. But last week saw bulls stall inside of the 2024 high and that brings questions to topside continuation in the pair. EUR/USD continued the advance last week following the rate cut rally following the European Central Bank’s move two weeks ago. There was technical context for bullish continuation as the pair broke through the topside of a bull flag formation but, to date, buyers haven’t been able to push for a re-test of the yearly high at the 1.1200 handle. There was seemingly an open door for a test of the highs last week as the pair showed three consecutive days of swing highs within 25 pips of that big figure. This week started with pullback but that also shows a bit of indecision as sellers were unable to test below last Thursday’s swing-low. EUR/USD Bigger Picture At this point it’s difficult to argue with the intermediate-term outlay in the pair, which has been decisively bullish since the rally began around the Q3 open. The pair was working around the 1.0700 at the time and as USD-weakness, prodded by a sell-off in USD/JPY, continued to drive DXY to fresh lows, EUR/USD continued its upward advance. But taking a step back, the argument can be made that the pair remains in the confines of a longer-term range and last week’s respect of the 1.1200 handle further speaks to that, as that, itself, is a lower-high from the 2023 swing at 1.1275. This sets up for an important few weeks as price remains within that shorter-term bullish trend into the Q3 close, with those very obvious resistance levels lurking overhead. I had written about the US Dollar to finish last week, and if the USD is going to rally, it’s probably going to need some help from EUR/USD bears. EUR/USD Shorter-Term Strategy Sellers made a quick push at the start of this week’s trade but as noted above, they haven’t been able to make much of a mark yet. But – this does set up some additional lower-high context as last week’s stall around 1.1175 is inside of the prior high at 1.1200, which is inside of the 2023 high at 1.1275. The 1.1140 level that I’ve been tracking in webinars is in-play as of this writing and there’s additional context for a possible lower-high up to prior short-term support, around 1.1155. If bears can defend that, the focus is on tests of deeper support. I’m tracking a Fibonacci level at 1.1081 that helped to bring the post-Fed bounce last week, and that’s followed by a swing at 1.1055. After that is the 1.1000 level and that’s the price that was vigorously defended into and around the ECB’s rate cut. Bears aren’t necessarily out of the woods on a first test below 1.1000, however, as the 1.09424 Fibonacci level could be a lead-in for bear trap potential on a bigger picture basis. That’s the 50% mark of the same Fibonacci retracement that set the high last year at the 61.8% (1.12697) and the low so far this year around the 38.2% (1.06152). --- written by James Stanley, Senior Strategist
by WHSelfInvest
Cancellation of “Head-and-Shoulders” Pattern. Bears trapThe "Head-and-Shoulders" (H&S) pattern is considered a powerful trend reversal indicator. However, it can also become very costly for new traders. Yesterday, the S&P provided a great example of H&S cancellation. Traders who entered short on the break-out of the shoulders line (and Monday's low) incurred losses after the price returned to the previous day's range and rallied all the way up. Such scenarios happen more often than you might think. To avoid being caught in such traps, it is important to consider two things: 1. Higher Level Context : In this example, the H&S pattern formed on the hourly time frame. But if we zoom out, we'll see that on the weekly chart, the price is in a strong uptrend, currently making new historical highs. This is a very bullish context, with buyers having full control over the price. 2. Price Behavior on the Break-out : Upon confirmation of a reversal pattern, you should expect sellers to jump in and drive the price down as fast as possible. It is "abnormal" to see the price returning to the previous range and gaining acceptance. This is a trigger that something is not right. Some people will add volume analysis on the break-out, but I’m personally not a fan of it, especially for SPY.
AMEX:SPYEducation
by hermes_trisme
Potential Ascending Triangle (NQ Futures)NQ Futures could be trying to setup an ascending triangle to catch bears short at the bottom with major upside potential with a breakout and confirm. Will almost certainly coincide with data/news that will either play out a bear trap or a bull trap on the same timeframe for the next let the market takes. Often these patterns forming at the bottom of a range end up being bull traps but anything can happen and it's best to be prepared for whatever happens.
CME_MINI:NQ1!
by Eclipse_Trading
Major Resistance After rejecting off the L1 ( white line ) in the second week of January @48k my next target by default is the L2 ( red line ) @30k by the end of Q2 or beginning of Q3. These support & resistance levels are calculated using my proprietary tool called LifeLines. Think of them as moving averages on steroids. I doubt that this happens but in the case that we close the month of February above 48k then I will be waiting for a closure below again before entering another position. In other words I am very confident that we will see a greater pullback before continuing the greater trend to the upside. Stop loss @49k
BNC:BLXShort
by TheBossssss
3
BTC: Short-Term Liquidity Hunt Before Bear Trap and DropBitcoin (BTC) is currently positioned for a short-term move targeting liquidity above the current highs, potentially luring in bears. This setup suggests a liquidity hunt, followed by a rebound from the heavily traded area, and then a push towards higher liquidity zones beyond the recent highs. It appears to be a tactical move to trap bears before a significant downturn. While the short-term outlook hints at a bullish trap, my global perspective remains bearish, anticipating a more substantial short position post-liquidity grab around the $44K level, possibly even higher. www.coinglass.com
Long
by Shved126
4
Matic - Bullish Momentum BuildingPolygon (MATIC) has been trading within a horizontal accumulation pattern on the daily timeframe, attempting a breakout previously but lacking the strength to sustain higher levels. The recent breakout from the lower boundary of the accumulation range provides a renewed sense of strength, positioning MATIC for potential upward momentum. Additionally, on the hourly timeframe, the continuous confirmation of bullish intentions through bear traps contributes to the positive outlook. 🔄 Daily Accumulation and Breakout: MATIC's extended consolidation within the daily accumulation pattern signaled a period of indecision and potential accumulation of positions. Previous attempts to break out to the upside were met with challenges, preventing sustained upward movement. However, the recent breakout from the lower boundary suggests a shift in dynamics, providing the necessary strength for potential growth. 🚀 Strength from Breakout: The breakout from the lower boundary of the accumulation range grants MATIC a significant boost in terms of potential upward momentum. Successfully establishing a higher trading range could indicate a newfound market sentiment favoring bullish movements. 🔍 Hourly Confirmations and Bear Traps: On the hourly timeframe, MATIC exhibits a pattern of continuously confirming its bullish intentions. The creation of bear traps, strategically inducing short-term downward movements, adds to the overall bullish narrative. These traps serve to shake out weak hands and provide additional fuel for faster growth. 💡 Trading Strategy: Traders and investors may consider positioning themselves strategically in MATIC following the breakout from the accumulation range. Confirmations on the hourly timeframe, especially through the use of bear traps, can contribute to the overall bullish case. Implementing effective risk management strategies, such as setting stop-loss orders, is advisable. 🔮 Future Outlook: The technical analysis suggests that MATIC is well-positioned for potential growth following the breakout from the accumulation range. Traders should remain vigilant and adapt their strategies based on real-time market data. The combination of the daily breakout and hourly confirmations, including bear traps, creates a favorable environment for bullish momentum. The cryptocurrency market's dynamic nature emphasizes the importance of flexibility and risk management in trading decisions.
M
by AlexWhale
ETH/USD POSSIBLE BEAR TRAP?!?!BITSTAMP:ETHUSD 🚀 Ethereum Update: Breaking Free from the Bear Trap! 🌕 Hey Crypto Traders! 🌐 Exciting times in the Ethereum market as we witness a breakout from the recent bear trap. 🐻 But don't fret, Hodlers – the charts are flashing some compelling bullish signals! 📈 Key Technical Indicators: Waning Moon Bullish Signal: The waning moon is casting its bullish glow, signaling a period of consolidation before a potential upward swing. 🌙 100 Day EMA Bounce: Ethereum bounced off the 100-day EMA, showcasing strong support. MACD Cross Confirmation: A bullish MACD cross adds weight to the positive outlook. 💡 What's Next? Keep a keen eye on the green trend line. If Ethereum breaks above it, we might be looking at new heights. The waning moon, coupled with technical indicators, paints a promising picture. 🌐 Stay Informed, Stay Ahead! #Ethereum #Crypto #Bullish #ToTheMoon #Breakout
BITSTAMP:ETHUSDLong
by MasterChef23
Turning Traps into Profitable Opportunities ! TOP 3 PATTERNSTrading traps are a common occurrence in the cryptocurrency market. They can be created by a variety of factors, including market manipulation, technical analysis, and psychological biases. While traps can be dangerous for traders who are not prepared, they can also be a source of profit for those who know how to trade them effectively. In this article, we will discuss three common trading traps and how to trade them profitably. We will also discuss how traps are created and how they can be used to your advantage. What Are Trading Traps? Trading traps are false movements in the price of a cryptocurrency that are designed to trick traders into taking a position in the wrong direction. They can be created by a variety of factors, including: Market manipulation: Market manipulators may create traps to trick traders into taking positions that are in their favor. For example, they may buy a large amount of a cryptocurrency to drive up the price, and then sell it off quickly to create a sell-off. Technical analysis: Technical analysts may use traps to take advantage of traders who are following technical indicators. For example, they may create a false breakout of a support or resistance level to trigger stop-loss orders. Psychological biases: Psychological biases, such as fear of missing out (FOMO) and fear of loss (FUD), can also lead traders to fall into traps. For example, a trader who is afraid of missing out on a potential bull run may be more likely to buy into a false breakout. In the example above, LINK was trading in a horizontal range for several months. The price then broke below the lower range boundary, which was a sign of a potential bear trap. However, the price quickly reversed and re-tested the lower range boundary. This was a good opportunity to enter a long position, as it showed that the trend was still in place. How to Identify Trading Traps There are a few things you can look for to help you identify trading traps, including: Volume: A sudden increase in volume can be a sign that a trap is being set. This is because market manipulators or technical analysts will often need to buy or sell a large amount of cryptocurrency to create a false movement in the price. Price action: A false breakout or fakeout is often accompanied by a sharp reversal in price action. For example, a false breakout of a support level may be followed by a sharp sell-off. Technical indicators: Some technical indicators, such as the Bollinger Bands, can help you identify potential traps. For example, the Bollinger Bands may widen before a false breakout, which can be a sign that a trap is being set. How to Trade Trading Traps Once you have identified a trap, you can trade it in one of two ways: Long trap: If you believe that the trend will continue, you can enter a long position on the re-test of the breakout level. Short trap: If you believe that the trend will reverse, you can enter a short position on the break of the breakout level. Examples of Trading Traps 3.1 Triangular Trap Unveiled: Discuss the bearish implications of descending triangles in technical analysis and their potential use as manipulation tools. Explore how market manipulators engineer these patterns to trigger artificial stop-losses. Case Study: NEAR's Triangular Intricacies: Analyze NEAR's descent within a descending triangle and its unexpected breakout. Offer insights into the motives behind orchestrating such traps and how traders can leverage these market dynamics. Here are some examples of how trading traps can be created and traded: Shakeout trap A shakeout trap is a false breakout that is designed to trick traders into taking a position in the wrong direction. For example, a cryptocurrency may be trading in a horizontal range for several months. The price then breaks below the lower range boundary, which is a sign of a potential bear trap. However, the price quickly reverses and re-tests the lower range boundary. This is a good opportunity to enter a long position, as it shows that the trend is still in place. Fakeout trap A fakeout trap is similar to a shakeout trap, but it occurs after a trend has already begun. For example, a cryptocurrency may be in a bull market. The price then breaks above a resistance level, which is a sign that the bull market is continuing. However, the price quickly reverses and re-tests the resistance level. This is a good opportunity to enter a short position, as it shows that the bull market may be coming to an end. Reversal trap A reversal trap is when the trend of a market changes direction. For example, a cryptocurrency may be in a bull market. The price then breaks below a support level, which is a sign that the bull market is ending. However, the price quickly reverses and re-tests the support level. This is a good opportunity to enter a long position, as it shows that the bull market may be resuming. The Art of Spotting Fakeouts: Define the concept of fakeouts and unveil their potential as precursors to bullish movements. Offer insights into distinguishing genuine breakouts from manipulative traps set by market actors. Case Study: ZIL's Quick Turnaround: Uncover the Zilliqa (ZIL) chart, examining the deceptive fakeout beneath a pivotal horizontal level. Emphasize the strategic importance of waiting for a retest post-fakeout as a confirmation signal. Conclusion Trading traps can be a dangerous but profitable part of cryptocurrency trading. By understanding how traps are created and how to identify them, you can increase your chances of trading them successfully. Additional Tips for Trading Trading Traps Use stop losses: Stop losses can help you limit your losses if you are wrong about a trade. Be patient: Do not rush into a trade just because you see a trap. Wait for the
Education
by Yaroslav_Krasko
2
The bear trap is set. The 2023 bear trap AS we can see on January 20th Bitcoin broke the down trend it has been in for over one year now. Recently the resistance was tested and was made in to support as Bitcoin took a strong bounce off of it. WE can clearly see this in the chart with the highlighted oval. Above that we have the bear trap zone and the fomo zone A break and hold of the 25.4k level leads to the setting of the bear trap. This bear trap zone goes all the way to 32k above that is the fomo zone and it goes to 47k and possibly even higher. These ar eth e levels to look for in the coming weeks. Another thing of note to look for is that Bitcoin could retest the break out zone at a later date {shown with the blue arrow} and as long as it holds it could then lead to the bear trap. What to look for The RSI will be a dead give away on what move comes first as I have drawn the down trend that it is in at the moment. If this should break above the down trend then it will do with the price and confirm the move. Thanks for looking Hit the like and subscribe for hot off the press charts. WeAreSatoshi Stay blessed in 2023.
BNC:BLXLong
by WeAreSat0shi
3
GRT : Bear Trap and Ascending channelThe journey of Graph (GRT) has been marked by a strategic escape from a bear trap and a subsequent ascent into a bullish parallel channel. Let's delve into the dynamics that unfolded, highlighting GRT's resilience in the face of adversity. Key Events: Bear Trap at $0.08: GRT found itself in a range-bound scenario, with a crucial support level at $0.08. A sudden and sharp drop below this level initially appeared bearish, creating a trap for unsuspecting bears. Swift Recovery: Contrary to the bearish indications, GRT showcased remarkable resilience by swiftly recovering from the bear trap. This rapid rebound hinted at strong buying interest and a potential change in market sentiment. Technical Analysis: Formation of a Bullish Parallel Channel: GRT's price action post-bear trap reveals the emergence of a bullish parallel channel. This channel signifies a more controlled and sustainable upward movement, often indicating a positive trend. Successful Swipe from Previous Day's Low: GRT strategically executed a swipe from the lows of the previous day, adding to the bullish narrative. Such swipes often serve as confirmation of support levels and fuel the next leg of the upward move. Trading Strategies: Channel Trading Opportunities: Traders may explore opportunities within the bullish parallel channel, considering long positions as the price respects the channel boundaries. Identifying potential reversal or continuation patterns within the channel can aid in tactical decision-making. Monitoring Key Levels: Keep a close eye on critical support and resistance levels, including the $0.08 level, which previously acted as a pivotal point for GRT. Breakouts or breakdowns from these levels could signal significant shifts in market sentiment. Conclusion: Navigating GRT's Bullish Trajectory GRT's ability to rebound from a bear trap and establish a bullish parallel channel underscores its resilience and appeal to market participants. Traders can leverage these insights to devise strategies that align with the current market dynamics. 🚀 Escaping Bear Traps | 📈 Bullish Parallel Channel | 💡 Strategic Trading Approaches 💬 Share your perspectives on GRT's recent price action and your strategies for navigating its bullish trajectory! 🌐✨
Long
by Yaroslav_Krasko
2
Major Levels Are Now Being Broken in the Altcoin Space!Traders, In this weekend's video, I am continuing my cautionary tale. You'll remember in my last video that I went all contrarian on you regarding the Bitcoin ETF approvals. I was not necessarily bearish. But I am not necessarily bullish either. I am only observing some indications on the charts that warrant caution. And thus, I stated that we need to be prepared to expect the unexpected. We could be at a mid-cycle top and the whole ETF approval thing could be a sell the news event. Altcoins, now seem to be backing that hypothesis as major support levels are being broken all around. We'll take a look at what I am observing on these charts.
INDEX:BTCUSDShort
by stewdamus
📈 BTC: GROW after Liquidity Trap! Bitcoin, the flagbearer of the crypto realm, is currently demonstrating a masterful dance within an ascending channel. Beyond the technicalities, there's a fascinating interplay of liquidity that savvy traders are watching keenly. Let's unravel the dynamics of BTC's ascent, the lingering liquidity, and what it implies for the next upward swing. Chart Analysis: BTC's Ascending Channel Strategy BTC has established itself within a well-defined ascending channel, a testament to the underlying bullish sentiment. However, the artistry lies not just in staying within the lines but in the strategic maneuvers within this channel. As BTC glides higher, there's a deliberate leave-behind of liquidity beneath, setting the stage for a cleaner upward trajectory. Liquidity Tactics: Setting the Stage for a Surge One intriguing aspect of BTC's current movement is the deliberate creation of liquidity pockets below the lower boundary of the channel. This isn't accidental; it's a tactical move to clear out lingering long positions. By doing so, BTC aims for a more decisive and sustainable upward movement, unburdened by overhanging positions. Trading Strategy: Anticipating the Clear Run For traders navigating the BTC landscape, recognizing the channel dynamics and understanding the liquidity strategy becomes crucial. Anticipating the potential sweep of these lower liquidity zones and a subsequent retest around the $33,000 mark can provide strategic entry points for those eyeing the next leg of the bullish journey. Conclusion: BTC's Precision Play BTC's ascent within the ascending channel is more than just a technical pattern—it's a strategic play of liquidity dynamics. The deliberate actions to clear out positions below the channel suggest a meticulous approach to ensure a cleaner and more robust upward movement. As BTC continues its precision play, traders are on the lookout for the anticipated surge beyond $33,000. 🚀 BTC Analysis | 📉 Liquidity Sweep Strategy | 💡 Ascending Channel Tactics ❗See related ideas below❗ Are you ready to ride the precision wave with BTC? Share your insights, strategies. 💚🚀💚
Long
by Yaroslav_Krasko
5
Power of Bullish Divergence 📈Divergence, a powerful concept in technical analysis, has been making waves in the world of Bitcoin trading. Recently, we witnessed a remarkable 90% surge in Bitcoin's price, driven by a bullish divergence pattern on the weekly chart. In this post, we'll delve into the significance of this pattern and explore the potential outcomes of a similar bullish divergence on the daily Bitcoin chart. Weekly Chart Bullish Divergence: A bullish divergence occurs when the price of an asset makes lower lows, while a relevant technical indicator, in this case, the Relative Strength Index (RSI), forms higher lows. In simple terms, it suggests that while the price is weakening, the momentum is picking up, potentially indicating a trend reversal. The recent bullish divergence on the weekly Bitcoin chart was a game-changer, leading to a substantial 90% price increase. Daily Chart Potential: Now, let's shift our focus to the daily Bitcoin chart and what we can expect from a bullish divergence on this timeframe: 50% Potential Gain: While it's difficult to predict exact price movements, historical patterns suggest that a bullish divergence on the daily chart could lead to significant gains. Confirmation Needed: Remember that trading based on a single indicator can be risky. It's essential to confirm the bullish divergence with other technical indicators or chart patterns for added reliability. Risk Management: Maintain a disciplined approach to risk management. Determine stop-loss levels and position sizes based on your risk tolerance. Caution and Patience: The crypto market is known for its volatility. While bullish divergences can be strong signals, they are not foolproof. Be patient and wait for confirmation before entering a trade. False signals can occur, so consider using multiple indicators to cross-verify your analysis. Conclusion: The recent 90% growth following a bullish divergence on the weekly Bitcoin chart showcases the power of this technical pattern. While it doesn't guarantee future success, it provides valuable insights into potential trend reversals. As we look at the daily chart, the prospect of a 50% gain from a similar pattern is intriguing. However, exercise caution, practice strict risk management, and consider multiple factors before making trading decisions. Trading in the crypto market is exciting, but it's also challenging. Stay informed, stay analytical, and remember that a diversified approach and continual learning are keys to success in crypto trading. 🚀📊🧐 ❗See related ideas below❗ Like, share, and leave your thoughts in the comments! Your engagement fuels our crypto discussions. 💚🚀💚
Long
by Yaroslav_Krasko
BTC Long, bottom or another bear trap?28.5k is the invalidation line for continued bull momo. Close below it on the dailv and I think BTC either sees another bear trap/ deviation to 26k followed by a bull reversal to 37k. If the bear trap is set it is extremely risky to play. If it fails, BTC could hit at least 23k for AUG and 20k to 18.8k for SEP because both are statistically red months during the recovery phase of previous bull runs. However, there is a minor bull case for the bulls considering we are at the bottom end of a linear regression trend from the bottom at 16k to the current price. Nonetheless, I do expect volatility soon. Trades: Trade 1 Long 28650, sl 28000, tp 30500, 32000, 36500, 40000 Conviction moderate. High chance of getting stopped out if 28.5k keeps getting tested and removing liquidity from that region. Trade 2 Long 26300, sl 24000, tp 30500, 32000, 36500, 40000 Conviction high. Lowered chance of getting stopped out and if a bear trap were to occur, this is the ideal entry. Trade 3 Short 30500, sl 32000, tp 28500, 26500 (close here if there's bull volume), 24500, 21000, 19500 Conviction moderate. Might get front runned ~29.5k. but use this trade as a hedge against another false rally that leads into a bear trap ~26k, or even worse at 20k if theres no bullish volume for the expected trap.
CME:BTC1!Long
by linebands
BTC BEAR TRAP : Trend Reversals 📈📉 Greetings, fellow traders! Today, let's explore a fascinating aspect of market dynamics – the concept that markets often change their trend direction when most participants least expect it. We'll dive into how we might currently be in a bear trap and what it could mean for a potential upswing. 📈 The Art of Contrarian Thinking: Market trends are tricky creatures. They often lure traders into thinking the current trend will continue indefinitely. However, seasoned investors understand that when everyone is convinced of a particular trend (bullish or bearish), the market may surprise with a reversal. 🐻 The Bear Trap: A bear trap is a situation where the market appears to be in a strong downtrend, leading traders to sell or short assets. However, this could be a cunning trick, as the market may reverse course, catching those overly bearish traders off guard. 📈 Signs of a Reversal: While we can't predict market movements with certainty, recognizing signs of a potential trend reversal is essential. This might include technical indicators, fundamental shifts, or sentiment changes. 🚀 The Anticipation of Growth: If we're currently in a bear trap, it suggests that the market sentiment is overly pessimistic. This can set the stage for a potential upswing when the market decides to confound the majority. 💡 Key Takeaway: The market has a way of playing tricks on participants. It's a reminder to remain adaptable in your trading strategy, ready to pivot when the unexpected happens. 🔮 The Future Unveiled: While recognizing a bear trap is insightful, always combine this with thorough analysis and risk management before making trading decisions. In conclusion, market trends can be both persistent and deceptive. Understanding that trend reversals can happen when they're least expected empowers traders to navigate the markets with greater flexibility. Stay vigilant, stay open-minded, and remember – in the world of trading, being prepared for the unexpected is often the key to success! 🧐🚀 ❗See related ideas below❗ Follow + Like this post and share your insights in the comments; your engagement fuels the creation of valuable content! 💚💚💚
Long
by Yaroslav_Krasko
6
XAUUSD - Bullish momentum or Bull Trap?Yesterdays PMI data came in and most probably busted many accounts. I watch these live videos on socials. Counted at least 18 people with sell orders for gold yesterday... we can see bullish momentum with gold currently - Breaking previous highs - Sweeping lows - Buyside target We can also see sell side liquidity, as market is creating higher highs, sellside liq is building.. What's the move? = Sit on your hands and study price action carefully. We not done for this week yet trust that ;) Those psychological levels are in play.. Follow your rules !
FOREXCOM:XAUUSD
by KingDee57
2
Cracking the Code of Bull and Bear TrapsHey Friends, let's dive into the captivating world of bull and bear traps. These traps can be quite the wild ride, so buckle up and get ready for some trading knowledge! A bull trap, my friends, is a sneaky maneuver by the market. It lures unsuspecting traders into believing there's a bullish breakout on the horizon. But guess what? It's a trap! The price quickly reverses and sends those traders into a tailspin, caught in a frenzy of false signals. Don't let the allure fool you! Now, on to the bear trap. It's the flip side of the coin, my friends. Just when you thought the market was about to take a nosedive, it surprises you with an upward surge. It's like a magician's trick, leaving all those who bet on a bearish breakdown scratching their heads. Bam! The bear trap strikes, and those traders find themselves caught in a bullish whirlwind they never saw coming. To navigate these treacherous traps, my dear traders, exercise patience and wait for confirmation. Don't jump the gun at the first sign of a breakout or breakdown. Look for additional indicators to support the move and keep a close eye on volume. Strong volume is the key, my friends! And don't forget to set those stop-loss orders, strategically placing them to protect your positions. Now, remember, studying market structure and learning from past mistakes is essential. Analyze historical traps, dissect their patterns, and absorb every little detail. The more you educate yourself, the better prepared you'll be to dodge those cunning traps in the future. So, my fellow traders, stay sharp, stay nimble, and stay ahead of those traps. It's a wild journey out there, but armed with knowledge and experience, you can conquer the trading world. May your trades be prosperous, and may you always stay one step ahead of those crafty bull and bear traps!
Education
by FortuneAI
1
BITCOIN ABOUT TO REPEAT THE SAME PATTERNAs you can see in the chart, we have been in range for 52 days. The previous range, lasted 53 days, if history repeats itself, between today and Thursday we should see a breakout to the downside and a retest of the 25k level. There are two main coincidences: 1- Almost the same downside movement distance to the major support (9%). 2- The same downside movement from the top of the range till the bottom of it (13%). However, we can observe a great difference, that it's the Volume. The previous range had 15.5M volume meanwhile this one had only 4.5M. That's three times less volume. Thing that can Indicate a very big move incoming. If what I say is correct, it could be a good choice to: - Open a short now till 25k. - In 25k Open a long till 35k. This is only a simple observation. Always do your own research. I would be very happy to see your opinion in the comments, if you agree, remember to give me a boost.
Short
by piccard54
2
SPX Triangle Will Break Soon but Which Way?Which Way Will the SPX Triangle Break? Consider All the Arguments Ever since the October 2022 lows, the S&P 500 SP:SPX has been consolidating especially when considered on larger time frames like daily and weekly. This consolidation has formed what is known as a triangle pattern (or symmetrical triangle). A triangle is a consolidation pattern that represents equilibrium in the balance between buyers and sellers. The range narrows and price action compresses until the consolidation ends. The Primary Chart above shows the current triangle that has formed. It is essentially a collision between a 3-month uptrend and a 13-month downtrend (lasting over a year since January 2022 highs). So long as price remains in this triangle, uncertainty about the intermediate term direction will likely remain. Many triangles have arisen this year, and each one has led to new lows. This one may as well, as the yield curves and macro data support this outcome. But price could whipsaw out the top of the triangle for a month or two before heading to lows. All possibilities remain on the table. For further discussion on the details of this triangle, please refer to the linked chart and post under Supplementary Chart A below. Supplementary Chart A 1. Arguments for Bear-Market Continuation and Further Declines to New Lows VIX has been trending lower to new lows. But this argument cuts both ways—it lies at multi-year support as well as the support zone for this entire bear market. It’s not a spot to be complacent. On the other hand, VIX could be forming a new seasonal range lower than the past few years. The downtrend in volatility must be respected until it breaks. But the break could be vicious and fast, occurring in a matter of hours / days. For now, VIX keeps failing right at the down TL from early October 2022 peaks. Supplementary Chart B (VIX) Consider the orange-colored down trendline from mid-October 2022 highs. Price continues to fail at that down TL. But price is also in the yellow rectangle, which is the major support / demand zone for volatility over the entire bear market to date. The pink uptrend line is a multi-year uptrend line where VIX has found support since 2017. SPX shows a daily bearish divergence on RSI. But no weekly divergences yet. Stochastics and another indicator (EFI) both show clear divergences on the daily. But sometimes triple divergences form. And sometimes, these divergences are erased with higher price action. Divergence create the conditions for a decline, they don’t guarantee one. And without weekly divergences yet, this minor daily divergence is too weak a signal to take to the bank. As of the December 2022 FOMC meeting, the Fed had not paused and it had not pivoted. In fact, the Fed remained hawkish, communicating a “higher for longer” message to markets. The FOMC’s published SEP (Summary of Economic Projections) showed that rates were forecasted to peak at 5.1% (on average) which was higher than its prior rate forecast of 4.6%. The Fed’s projections also showed that it expected no rate cuts throughout 2023. In other words, higher for longer, even if rate hikes were paused. Will the Fed’s messaging and policy from December 13, 2022, remain steadfast? If so, the markets will likely struggle to find a way higher unless they continue to completely disbelieve the Fed. Note that rate markets (and equity prices) are currently disagreeing with the Fed about rate cuts later this year. That all could change on February 1, 2023. Money supply has continued to shrink. Tom McClellan said to financial media recently that M2SL has been shrinking while GDP has been growing, and this has never happened—the ratio of M2/GDP has never been shrinking this fast. Note that there is a lag b/w M2 changes and the effects on markets. But M2 has been shrinking for a while now. Note that when M2 rises faster than GDP, this can fuel rallies a year later, but this is the opposite of that scenario. However, note that US Treasury Department maneuvering relating to the debt-ceiling crisis could hamper the Fed’s efforts to drain liquidity from markets. Other than its general effect on markets, this maneuvering is well beyond the scope of this article and the author’s knowledge. Consumer spending and corporate profits cannot hold up much longer given the leading economic indicators (PMIs, ISMs, Empire State Manufacturing Index, retail sales reports from December, mortgage applications, and housing data). But equity markets don’t seem convinced. Markets can remain irrational longer than traders can remain solvent. Gold on a ratio chart to SPX (GLD/SPX) is still outperforming. This is not an all-clear signal for equities, especially the blue-chip index of US stocks. Supplementary Chart B (GLD/SPX) Typically, a bear-market bottom / final low does not happen while yield curves remain inverted. One WS analyst stated unequivocally yesterday that 85% of the yield curves are currently inverted. According to that firm's indicators, if more than 55% of the yield curves are inverted, a recession always follows. But when? The timing is the tricky part especially for traders and investors. Bear markets can fool the vast majority. The 3m/10y curve has been inverted to levels not seen since 1981. The inversion has fallen deeper into negative territory than any other inversion on the data available on TradingView’s charts. The final bear-market low typically happens after the Fed has pivoted and cut rates for some time. And remember, when the Fed cuts, it’s not because the economic outlook and corporate earnings are bright. Rather, the Fed cuts because of deteriorated economic conditions, tanking earnings and earnings estimates, horrible employment numbers (a recession). Supplementary Chart C.1 (3m/10y) For further discussion on the 10y/3m yield curve, see the post linked here: Supplementary Chart C.2 Recent PMI data from SP Global was negative economically (US Manufacturing PMI at 46.7 while December was 46.2, and US Services PMI at 46.6 while December was at 44.7) though it moderated somewhat (slightly less negative) from the prior month’s data. “The US economy started 2023 on a disappointingly soft note with business activity contracting sharply again in January. It showed subdued customer demand and impact of high inflation on client spending. January data also indicated a “faster increase in cost burdens at private sector firms. Although well below the average rise seen over the prior two years, the rate of cost inflation quickened from December and was historically elevated.” The commentary by SP Global’s economist provided along with their recent PMI report noted that “not only has the survey indicated a downturn in economic activity at the start of the year, but the rate of input cost inflation as accelerated into the new year, linked in part to upward wage pressures, which could encourage a further aggressive tightening of Fed policy despite rising recession risks.” This suggests that even if inflation has peaked, it may not be heading to the 2% target as fast as it moved down from the peak to the current levels. And it implies that stagflation may be around the corner as economic growth slows but sticky inflation does not dissipate. Major past selloffs in markets have been preceded by a very low unemployment (UE) rate. The rate has been as low as 3.5% recently. One analyst, Eric Johnston at Cantor Fitzgerald, noted that investors would do well by buying markets when the UE rate is 9% to 10%, and selling the market when it reaches extreme lows from 3% to 4%. UE rates haven’t begun to significantly roll over, and the Fed has remained focused on the tight labor markets and services sectors as sources of more sticky inflation. So if PMIs from January are showing wage pressures increasing somewhat, that doesn’t suggest the Fed will be *cutting* rates soon, though a pause may be discussed as rates approach 5%. Taxes as a percentage of GDP are at the level that coincides with recessions. Taxes are 18% of GDP. 2. Arguments for a Rally That Precedes New Bear Market Lows First, a rally that breaks the down trendline does not immediately negate the bear market. The 2000-2002 bear market experienced a substantial multi-month break of its down trendline (complete with a successful backtest after the break) before the next major leg down to new lows occured. Supplementary Chart D (2000-2002 Example) SPX continues to stabilize above major support / resistance zones such as 3900 and 3950. And it has closed above 4000 three consecutive days this week: January 23, 24, and 25. When it meets the down TL, it has not been reacting lower the way it has on every other test of the trendline during this bear market. It’s spending quality time with the TL, which is a new phenomenon / characteristic when price and the TL meet. SPX continues to hold above major anchored VWAPs from August, October, and December 2022, which range from 3850 to 3900. AAPL's price action is fairly bullish in the short-to-intermediate term. Here are the bullish technicals arising on AAPL's chart. AAPL’s daily chart shows a failed breakdown beneath major support levels over the past year. AAPL broke below $134.37 and $129.04 and fell to a new low, but quickly reclaimed $129.04 and $134.37, so this constitutes a failed breakdown. The failed breakdown is visible on the daily chart, so this is supportive of prices for several weeks to a couple months. $134.37 was the level coinciding with the lows from October 13 and November 4, 2022. $129.04 was the June 2022 low, which was undercut in December 2022 and early January 2023. Price broke below all these levels and then immediately reclaimed them. AAPL’s failed breakdown coincided with a tag of the parallel downtrend channel from the all-time high. AAPL shows positive (bullish) divergences with momentum indicators on both the daily and weekly charts. AAPL remains right at or slightly above the down TL from the mid-August 2022 highs, which was a fairly steep 5-month downtrend. AAPL remains above a short-term TL from June lows, but it also remains contained in its downtrend channel from the all-time high. AAPL is in no-man’s land, with some bullish forces that brought it here (divergences and failed breakdowns) Supplementary Chart E.1 (AAPL's Failed Breakdown) Supplementary Chart E.2 (AAPL's Parallel Channel Support) NDX (Nasdaq 100) broke above its down TL (linear chart only) and has held above it as well. It also has been making higher lows since the October 2022 lows. Supplementary Chart F.1 (NDX QQQ Log TL) Supplementary Chart F.2 (NDX QQQ Linear TL) IWM broke above its down TL on both log and linear charts. But it remains at critical resistance at the $188-$192 zone. It remains above intermediate term VWAPs from swing highs and lows in August, October and December 2022 (which are around $180), but it still remains below the VWAP anchored to its all-time high. Supplementary Chart G (IWM Linear TL) HYG broke above its down TL. Like other TL breaks, this could ultimately be a false signal, but here it has persisted for some time. HYG had a breakout above its down TL in the 2007-2009 bear market driven by the great financial crisis. This breakout was a false signal b/c the bear market was not over until early 2009, when the SPX made new lows. HYG resumed a downtrend after breaking above its down TL and went back to lows again and made lower lows, a move that coincided with SPX heading to new lows in Q1 2009. HYG shows a small bearish divergence on RSI on the daily chart. Wait for a larger bearish divergence to form on both daily and weekly charts perhaps. VIX has been trending lower to new lows. But this argument cuts both ways—it lies at multi-year support as well as the support zone for this entire bear market. It’s not a spot to be complacent. On the other hand, VIX could be forming a new seasonal range lower than the past few years. The downtrend must be respected until it breaks. VIX keeps failing right at the down TL from early October 2022 peaks. Consumer spending and corporate profits cannot hold up much longer given the leading economic indicators (PMIs, ISMs, Empire State Manufacturing Index, retail sales reports from December, mortgage applications, and housing data). But equity markets don’t seem convinced. Markets can remain irrational longer than traders can remain solvent. Earnings at major publicly traded companies may not be deteriorating quickly enough to disprove the “soft-landing” narrative that pervades markets. Recession does not mean stocks go straight to lows when yield curves have inverted. Recessions take time to unfold, just as the damage to economies takes time when rates are restrictive. There is a lag. Both FTSE and DAX have taken out the highs from mid-December 2022. FTSE is approaching multi-year highs. Both have broken above down TLs from the bear market. Both have decisively reclaimed 200-day SMAs. Both have been forming higher highs and lows Multi-week bear-traps occur frequently where significant down trendlines are broken until the bear market resumes in earnings in a period of several weeks or months. The 2000-2002 bear market provides an excellent example of this. So a break to the upside in the triangle pattern on SPX may last for several weeks or even months before the real downside move begins. Just because it’s been challenging and choppy does not mean it won’t get worse and more trappy. The third year of a presidential term (US markets) is nearly always bullish. There have been exceptions according to Tom McClellan (technical expert citing 1939 as an exception to this rule but noting that Hitler’s army was marching across Poland at the time). Some have said that the most bullish quarter of the presidential cycle is Q1 of the third year (technical expert Mark Newton speaking to financial media on January 24, 2022). Breadth has been strong lately, and some technical analysts have cited “breadth-thrust” indicators as giving bullish signals. Markets continue to disbelieve the Federal Reserve. Consider the differential b/w the Fed’s forecasts and the rate markets forecasts about whether rate cuts will happen this year, and where the terminal rate will be. So even if the Fed remains hawkish at the next meetings, perhaps it won’t matter. Markets will do what they want to do, including "fighting the Fed." You don't have to fight the Fed though or any other central bank. But don't fight the trend either. The Fed’s messaging at the February 1, 2023 FOMC presser may be slightly more dovish, or it may be interpreted as dovish if Powell so much as mentions a pause in hikes, or that the FOMC is discussing a pause. Even if Powell remains hawkish, sometimes markets can interpret the Fed Chair’s statements (sometimes ambiguous) the wrong way—recall that this happened at the July FOMC in 2022, after which Powell cleared up the confusion at Jackson Hole in August 2022 (tanking markets immediately). Equity positioning remains fairly underweight US equities according to financial experts on this subject. This could lead to momentum chase higher to trap all the bears before the real decline gets underway. Maybe stocks continue higher until two things occur: EPS estimates fall further, employment numbers start getting quite ugly, and the Fed is not as accomodative as it has been in past economic recessions (because while inflation has peaked, it may not fall directly to the 2% target, and with easing financial conditions, perhaps inflation could stop falling rise in Q1 2023) Equal-weighted S&P 500 (RSP) has broken above its down TL on a daily close as of January 25, 2023. The offense-defense ratio (consumer discretionary divided by consumer stables) RCD/RHS shows a breakout in this ratio above 8-month highs in the ratio’s value. This potentially signals near-term strength in equity markets as offensive stocks (consumer discretionary) outperform stocks defensive names (consumer staples) ________________________________________ Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed. Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders. DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
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