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Home Cryptocurrency news Bitcoin

This Signal Could Suggest Latest Bitcoin Rally Was A Bull Trap

Tony Spilotro by Tony Spilotro
7 months ago
in Bitcoin, Cryptocurrency news, Technical analysis
Reading Time: 2min read
bitcoin bull trap td 9 sell signal

Businessman trying to get money under big wooden box trap

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Bitcoin price rebounded hard from $10,000 and in a flash already found itself back above $11,000. Thus far, the key level couldn’t hold, and now signs are appearing that could suggest the rally was noting more than a bull trap and retest of resistance turned support.

TD Sequential Indicator Gives Bull Trap Warning With Perfected TD 9 Sell Setup

This week, Bitcoin blasted back above $11,000 but failed to hold the critical zone as it did the last time the cryptocurrency had a stretch of extended intraday upside.

At the top of the recent rise, however, the TD Sequential indicator has perfected a TD 9 sell setup. A 9 setup is perfected when the 9 candle reaches higher than its previous candle closes – imperfect setups are less reliable, but can still result in a drop.

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Related Reading | Bitcoin Price Revisiting $11,000 Could Confirm Short-Term Bearish Reversal Pattern

The tool was designed by market timing expert Thomas Demark to signal trend exhaustion, and therefore, potential turning points that could lead to reversals.

The signal appearing at the height of a retest of support turned resistance, could suggest that the latest rally is a bull trap and more downside is next for the cryptocurrency.

 

bitcoin btcusd td 9 sell setupBTCUSD Daily TD 9 Sell Signal TD Sequential Indicator | Source: TradingView

Bearish Retest And Possible Head And Shoulders Pullback Confirms Support As Resistance

TD 9 signals are usually accurate enough to compel traders to take a position in any asset. The tool has called several tops and bottoms in Bitcoin – and recently triggered the same sell setup on the two-week timeframe at the peak 2020 high.

If the bull trap confirms and prices fall, what may have actually happened was a pullback to retest support turned resistance at the neckline of a head and shoulders top formation.

bitcoin btcusd head and shouldersBTCUSD Daily Head and Shoulders Pullback Confirmed? | Source: TradingView

Head and shoulder are typically reversal patterns. But before prices reach their target, statistics show that price actin tends to come back to retest the neckline in a throwback.

Once confirmed, the target is then reached. This pullback and bearish retest coinciding with a highly accurate sell signal doesn’t bode well for Bitcoin bulls, who may have been over confident that $10,000 had held thus far.

Related Reading | Did Bitcoin Just Confirm It’s Largest Reversal Pattern In History?

Another retest of $10,000 could be next after failing to hold above $11,000. Was this latest move a bull trap, or are bears in for a surprise in the days ahead when the current rally continues higher?

Featured image from DepositPhotos, Charts from TradingView
Tags: bitcoinbtcbtcusdBTCUSDTcryptoTD Sequentialxbt.xbtusd
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter and feel free to drop me a line if you would like to work together.

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