What is a bear trap in trading and how to avoid it?
Intended to convince market participants of a price correction, bear traps are orchestrated by entities with large holdings to make quick profits. How to identify and avoid a bear trap?As a difficult proposition for novice traders, a bear trap can be recognized by using charting tools available on most trading platforms and demands caution to be exercised.In most cases, identifying a bear trap requires the use of trading indicators and technical analysis tools such as RSI, Fibonacci levels, and volume indicators, and they are likely to confirm whether the trend reversal after a period of....
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Bitcoin price action has now spent a total of nine days in a short-term uptrend, capping off a bounce back to 2021 highs. The sequence of mostly green candles has now triggered and perfected a TD 9 sell setup on daily timeframes. However, the signal has repeatedly failed to yield results since the more dominant high timeframe uptrend began. Is this time different? Or is this yet another bear trap layered into a bull flag […]
Newbie crypto traders should be wary of bull traps. If you suspect one is on the way, here are some tips to identify it. How to identify a bull trapHere’s how to spot a bull trap with some tell-tale indicators that one is on the way:RSI divergenceA high RSI might be an indication of a potential bull or bear trap.A relative strength index (RSI) calculation may be used to identify a possible bull or bear trap. The RSI is a technical indicator, which can help determine whether a stock or cryptocurrency asset is overbought, underbought or neither.The RSI follows this formula:The calculation....
Crypto analyst Merlijn has described the Bitcoin price crash to $91,000 as a major bear trap as optimism returns to the market. The flagship crypto had dropped to this level following a wave of weekend sell-offs but has since recovered above the psychological $100,000 level. Bitcoin Price Crash To $91,000 Termed “Biggest Bear Trap” In an X post, Merlijn described the Bitcoin price crash to $91,000 as the “biggest bear trap of this cycle.” The analyst noted that this happened in the 2017 and 2021 bull runs and has now occurred in this 2025 bull cycle. He is optimistic that Bitcoin and....
An ascending triangle setup promises major price rebound in the Ethereum price in 2022. Ethereum's native token, Ether (ETH), continues to face downside risks in a higher interest rate environment. But one analyst believes that the token's next selloff move could turn into a bear trap as the market factors in the possible release of the Merge this coming August.ETH to $4K?Ether's price could reach $4,000 by 2022's end, according to a technical setup shared on May 20 by Wolf, an independent market analyst.The analyst envisioned ETH moving inside a multi-month ascending triangle pattern,....
Bitcoin price is on the rebound, but after such a sharp fall and more than 50% retracement, any reversal must be considered a potential bull trap until much higher prices are reclaimed. Further adding credence to the theory of a potential bull trap, a trend strength indicator very clearly shows that bears are in charge, […]