Recently, there has been a movement in altcoins led by Bitcoin. This has excited cryptocurrency investors. Some analysts have declared that this could be a "". Some analysts have declared the start of the Bull season. Cryptocurrency investors have heard of the word “” but may not know the exact meaning.
In this article, we will try to understand what a “
If you're ready, let's start …
What is a Bull Trap…?
Bull Trap; It is a market manipulation movement designed to mislead small investors. This move is based on the creation of a false decline in the market followed by a welfare trend. The main purpose of manipulation; is to enable novice investors to buy cryptocurrencies held by large investors at high prices.
Bulls swing their horns from bottom to top when attacking their opponents. The bull market trap gets its name from this form of attack. While the manipulation is being constructed, a false momentum is created from the bottom up. The movement in question aims to activate the psychological behavior of small investors. When the manipulation starts, the cryptocurrencies fall. This decline encourages novice investors to acquire financial assets. However, the purchase of these assets results in profits from the capitalists who set up the manipulative movement.
How to Make a Bull Trap… ?
The first stage of the is when the loss-making investors start to sell their holdings. At this stage, a certain mobility is noticed in the market. Small investors are expected to enter the buying wave once the collection is complete. The artificial fall created ends at this stage and a false stability is established. The loss of novice investors begins with the increase in volume. After this stage, sharp decreases occur in cryptocurrencies as the saturation rate in the market develops.
Price range consolidation is one of the vital stages of a bull trap. This state of consolidation creates a temporary positive atmosphere in the market. Small investors usually act according to this atmosphere and tend to buy cryptocurrencies. When the said trend is realized, the manipulation planned by the big investors will have achieved its purpose.
The downtrend starts after the above-mentioned positive mood takes place. Cryptocurrencies sold to novice investors lose value at this stage. The assets held by the capitalists increase their value due to these movements.
What is a Bull Trap Pattern … ?
Bull Trap; It is understood by seeing the lines called candles on the market charts. Graphs that occur when there is price activity at certain intervals are called this way. In order to distinguish this situation from routine market activity, it is necessary to wait for sudden uptrends and downtrends.
Flag lines are a distinctive part of the formation. These lines are formed on the chart when there is a sudden increase in prices and then a slow decrease in prices. After the lines in question are seen, the sudden rise begins. It is also critical that the lines are in a stable course on the chart. The misleading side of manipulation is this temporary stability. In such a case, you can protect your assets against manipulative movements by stopping cryptocurrency trading.
How to Tell for a Bull Trap … ?
Market movements are shown on the chart with the balance line. The can be understood by following this line. Lines that move up and down with short intervals indicate the onset of bull market conditions.
occurs in the stock market, sudden price changes do not occur at the beginning. Novice traders may then think that a routine market movement has occurred. While the manipulation is taking place, the price range does not initially break upwards. The point where the line remains stable is considered the resistance point. After this point is exceeded, a downward trend takes place in cryptocurrencies. Here are the main movements that indicate that bull trap conditions are present in the market:
RSI Deviation
can be an indication of a potential bull or Bear Trap calculation can be used to identify a possible bull or bear trap. The RSI is a technical indicator that can help determine whether a cryptocurrency asset is overbought, underbought, or neither.
In a possible bullish trap example, a high RSI and overbought conditions indicate increased selling pressure. Traders are eager to pocket their profits and will most likely close trades at any moment. As a result, the initial breakout and uptrend may not be an indication of continued price increases.
No Volume Increase
When the market is truly bullish, there should be a noticeable increase in volume because more people are buying the securities. If there is little or no increase in volume at the exit, it is a sign that there is not much interest in the security at the price and the rally may not be sustainable.
The price increase without a significant increase is likely due to bots and retail traders competing for the position.
Absence of Momentum
When a cryptocurrency experiences a sharp decline or gap with massive red candles, but then recovers very slowly, it is indicative of a . The natural tendency of the market is to move in cycles. When it reaches the top of a cycle, it's often a period of consolidation as the bulls and bears fight for control.
This lack of momentum can be considered an early warning sign that the market is about to turn around.
Lack of Trend Break
A drop in price is indicated by a series of lower lows and lower highs. Trends in cryptocurrency prices do not always change when advances are made. The downtrend is still intact as long as the price increase does not break the latest low.
Lack of approval; It is one of the most common mistakes made by those caught in Bull Traps. If the current high does not surpass the previous high, they should already suspect that it is in a downtrend or range.
This is generally considered the "nobody zone" which is one of the worst places to start a purchase unless you have a good reason. While some traders may be disappointed with this, many are better off waiting for confirmation and buying at a higher price than attempting to "get in early" and fall into the trap.
Retesting the Resistance Level
The first indication of an approaching bull trap is strong bullish momentum that is maintained for a long time but quickly reacts to a specific resistance zone. When a cryptocurrency forms a strong uptrend with little bearish pressure, it means that buyers flock to all its resources. However, when they reach a resistance level that they are unwilling to break or are afraid of, the price often reverses before it can move higher.
A suspiciously large bullish candle
In the final stage of the trap, a large bullish candle usually covers most of the candles to the left. This is usually the last effort of the bulls to take control of the market before the price reverses. It can also occur for several other reasons:
- Big players are deliberately raising the price to lure unsuspecting buyers.
- New traders are confident that a breakout has occurred and start buying again.
Sellers deliberately allow buyers to dominate the market for a short time, allowing sell-limit orders above the resistance zone to be accepted.
Formation of an Interval
The last feature of a bull trap arrangement is that it creates a range-like pattern at the resistance level. An asset's price is said to bounce back and forth at a support and resistance level when it fluctuates within a range.
This range may not be perfect, especially at the higher end, as the market may still be creating smaller, higher peaks. Still, the beginning of the can be seen as the huge candle mentioned earlier forms and closes outside of this range.
My Last Words; is a professionally constructed manipulative move. These conditions can be difficult to notice at first. In such a case, it is necessary not to act hastily to protect the investments. The depreciation and stability of cryptocurrencies may seem like a profitable investment opportunity. On the other hand, manipulative movements are specially planned for small investors to make a loss.
As I always say; Listen to everyone, decide for yourself...
