Bitcoin and the Crypto Market Pump
The last week in the crypto markets has been interesting, to say the least. The recent Bitcoin and overall cryptocurrency market pump has certainly made some stir in the community. You have mega bulls ready to bet the house, bears that are still screaming for more downside, and then those of us who are still on the fence and just taking the data as it comes.
Bitcoin Is WAY Overbought
On the daily timeframe, as you can see on the right-hand side of the chart above, Bitcoin is extremely overbought when looking at the RSI and momentum wave indicators on Market Cipher. It is rare for a parabolic move like this to sustain for a long period of time without the price correcting back to a fair value level.
Rising Wedge Pattern
On the left-hand side of the chart, you can see the rising wedge pattern that is forming. This pattern has a success rate of breaking to the downside about 65% of the time. This means that the supply zone is being bought up, but the buyers are losing steam at these prices, so the price will have to correct back to a point where people will buy it up again.
Looming Bull Trap
Many analysts, including myself, are seeing that a possible bull trap is in play. The price is hitting the 200-day moving average and with these overbought conditions, that is prime making for a correction. So, you want to make sure you are playing it smart and not FOMOing into a trade just because the herd on Twitter is saying the bear market is over.
Things are starting to look bullish, and we may have seen the bottom, but just hold up and let's see how the price continues to act this week before selling the house and betting it all on Bitcoin or whatever altcoins you may fancy!
Stay safe out there, my fellow traders. This is The Logical Dude signing off for Coin Logic! See you in the next trading session!
Nothing said is financial advice.
This is for educational and recreational purposes only!
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Posted from my blog with Exxp : https://coin-logic.com/looking-out-for-bull-traps-bitcoin-is-way-overbought/