This Signal Could Suggest Latest Bitcoin Rally Was A Bull Trap

Tony "The Bull" Severino

1 year ago

2 mins read

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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.

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.

BTCUSD 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.

BTCUSD 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.

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

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

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In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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