Are We in a Bull Trap right now? — and How to Identify It?
These all point to a short-term UP, with either more DOWN, or more SIDEWAYS
After the hard Capitulation from $BTC and others recently, you’re seeing a relief bounce as bears take profits and sip Margaritas with their recent profits. BEWARE — not out of the woods here, as a CME GAP is at $35k right with the 21EMA and the .50 fib.
Content converted from the thread by Professor Keith on Twitter.
What is “capitulation”?
Think of it as everyone piling on and kicking a dead horse…in this case, the crypto market. A HARD fall with no relief is the best way to put it. These happen sometimes, and usually, a relief bounce follows when the bears are satisfied with profit from short.
Are we in a bull trap right now?
Key levels will need to be broken to start a new uptrend, and bears are still in FULL CONTROL right now. This is CURRENTLY a bull trap. $35k needs to break AND HOLD.
How do I identify the bull trap?
Why 35K? How do I know that? that’s the beauty of Fibs, and confluence (confirmation from many sources). Price action typically follows fibs pretty well, and the downtrend line is still far away from the action. Relief MAY continue here for a week (rough estimate, NFA).
0.5 Fib
That KEY LEVEL is .50 fib, or roughly $35k. this zone is the “continuation” zone, where the price can break and go up, or fail and continue down with the trend.
CME gap
ALSO at this level is the CME gap. CME is the only publicly traded futures market in the US. $BTC and $ETH are on it.
On Friday, May 6th, the CME market closed. $BTC as we know never stops. if volatility happens, this creates a gap when the market OPENS on the following Sunday, May 9th. CME gaps close 83% of the time (high probability), by a wick or candle closing.
The example below is from 12/3/21.
Other indicators
Other confluence of the $35k area includes the 8EMA, 21 EMA, and S2 pivot. Pivot points give us Support/Resistance levels based on a mathematical formula and Fibs. we see here that S2 and S3 will be likely barriers to price action as will the 8EMA (green).
In conclusion
These all point to a short-term UP, with either more DOWN, or more SIDEWAYS. Probability of a MOVE UP beyond $35k increases if we can break and Hold the red trend line, 35k, 8/21ema, S2 pivot (a lot, huh?)… Confluence says WAIT AND SEE. risk/reward = BAD atm FOR ME.
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Acknowledgment
Content converted from the thread by Professor Keith on Twitter. Follow him for more quality content, including alpha, research, and trend.
