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LINKS FOR ADDITIONAL READING FOR THIS VIDEO & ALL INFO IN TEXT DOWN BELOW:
What is a Bull Trap??
Why $4,000 is a significant number:
Three White Soldiers:
What is a Candlestick?:
BTC Price Points:
What It’s All Really About:
I can’t make a video like this without the disclaimer that I am not a financial expert, this is not investment advice, all information provided in this video is for entertainment purposes only.
If you’ve heard the phrase “Bull trap” being thrown around lately because the price of Bitcoin has begun to rise a bit, but you’re not sure what it is, or what you should or could do about it. Let’s take a better look into it today.
So right off the bat, a bull trap is essentially a false positive. It occurs when a coin that has been in a downward price trend suddenly reverses but that reversal doesn’t have enough momentum and ultimately the coin continues is downward trend. This is also called a whipsaw pattern.
If you’ve been in this space for the past year, you certainly are well aware of the downtrend to which I am referring. As of late, there seems to be a bit of hope in the air that the bulls may have gained some traction and the crypto winter may be over. Are we seeing a bull trap?
Here are some things to take note of if you want to determine this:Is the trading volume increasing with the price? If not, please be careful with your trades, this very well might be a bull trap. Low volume signals that this price movement doesn’t have a lot of momentum and could easily retrace.
Are there bullish candlesticks that follow the breakout? A Three White Soldiers is one example of a bullish candlestick pattern that is used to predict the reversal of a downtrend.
If you are a trader and you want to protect yourself from taking big losses during a bull trap, double check the volume, if it’s low relative to the price movement, go ahead and set some stop losses so you will be protected if the price ends up falling.
A lot of people have been a bit on edge lately with Bitcoin and this price of $4,000. This is a significant price point for Bitcoin because for the past 4 months, this price has been the battle ground for the bulls versus the bears, and the bears have been winning, meaning there have been more traders willing to sell at a lower price than $4,000.
Luckily for Bitcoin, it has now established this $4,000 mark as a level of support. This means that instead of trying to fight upwards past $4,000 it now has become a price point that is somewhat a safety net that Bitcoin has not fallen past. So if we consider $4,000 a victory, what is the next hurdle and what happens then?
According to good old Yahoo Finance, these are the key resistance levels that Bitcoin will need to surpass for us to see a price like $5,000 and beyond.
First is $4,190 which Bitcoin did surpass about a month ago, but that victory was very short-lived, it was not met with much momentum at all and ended up resulting in a quick retrace down to about $3,800. And that’s something to take into consideration. The speed at which Bitcoin rises, a slow rise will exhaust the bears and give the bulls a better chance to establish dominance. Which it seems like this is what we have been witnessing this past week.
After $4,190, keep your eye out for $4,236 and than $4,388. Again, according to that yahoo finance article, if these price points are met and coincide with high volume, $5,000 is next.