Bitcoin (BTC) crashed below the $55,000 price level in what some analysts believe is a bear trap. If these analyses play out, the leading cryptocurrency could soon revert its downtrend into a bullish outlook for new highs.
One of these technical analyses examines a bull diamond chart pattern shared yesterday on TradingView by The ForexX Mindset. This formation usually appears after a prolonged downtrend and marks a key moment for a possible reversal.
According to the trader’s analysis, Bitcoin now shows a bullish diamond in the three-day price chart, but there is more. The ForexX Mindset warned of a bear trap that would appear before the reversal could play out.
In particular, the analyst highlighted Bitcoin would likely trade between $50,000 and $55,000 before any significant surge. Notably, BTC was trading above $56,800 at the time of the analysis, still inside the diamond formation.
Bitcoin bear trap plays out: Is a bounce incoming?
As forecasted, Bitcoin trades at $54,050, down 3.57% in the last 24 hours, dominated by a bearish sentiment. Investors already started calling for even lower prices, some eyeing the $50,000, $45,000, or even $40,000 levels.
If things go as the “bull diamond” analyst expects, BTC could find support at $51,200 for a bounce. However, he explained that this movement could happen before that.
On a similar analysis, Cobra Trader shared a chart on X on September 6, projecting a Pitchfork indicator over Bitcoin. Interestingly, this projection aligns with the diamond’s bear trap, targeting the same zone as support.
Are you guys ready? #bitcoin pic.twitter.com/NiWRjR861C
— CobraTrader (@Algorit_trading) September 6, 2024
Overall, this would be a favorable moment for market makers and whales to open long positions, considering the extra liquidity bears are providing by panic selling Bitcoin and other cryptocurrencies. The cryptocurrency market tends to move as opposed to the dominating sentiment, navigating the liquidity retail offers.
Nevertheless, Bitcoin is extremely volatile and hard to predict. To make profitable decisions, traders should remain cautious and avoid overexposure, understanding that technical indicators are not conclusive but can help.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
