When trading Bitcoin (BTCUSDT), you’ve probably heard of terms like Bear Trap and Bull Trap. These are traps that the market sets to deceive us, causing us to make wrong decisions and suffer losses. Let’s explore how to identify and avoid these traps.
1. What are Bear Trap and Bull Trap?
Bear Trap: This occurs when Bitcoin's price drops significantly, leading us to believe that a downtrend has begun, so we sell. But then, the price suddenly rises sharply. The result? We sell at the wrong time and miss out on potential profits.
Bull Trap: On the other hand, a Bull Trap happens when Bitcoin's price surges, making us think that an uptrend will continue, so we buy. But then, the price reverses and drops sharply, causing us to lose money by buying too early.
2. How to Identify Bear Trap and Bull Trap
Bear Trap: When the price drops but without strong trading volume, and RSI is in the oversold region, but the price does not continue to fall.
Bull Trap: When the price rises but trading volume does not follow suit, and RSI is overbought, but the price fails to maintain the uptrend.
3. How to Avoid Falling Into These Traps
Use Stop-Loss: Set stop-loss orders at key support and resistance levels to protect your account if the market moves against your expectations.
RSI: Use RSI to identify when the market is overbought (Bull Trap) or oversold (Bear Trap), helping you make better decisions.
EMA: Use moving averages like EMA 50 and EMA 200 to determine the main market trend and avoid being misled by “false moves”."
1. What are Bear Trap and Bull Trap?
Bear Trap: This occurs when Bitcoin's price drops significantly, leading us to believe that a downtrend has begun, so we sell. But then, the price suddenly rises sharply. The result? We sell at the wrong time and miss out on potential profits.
Bull Trap: On the other hand, a Bull Trap happens when Bitcoin's price surges, making us think that an uptrend will continue, so we buy. But then, the price reverses and drops sharply, causing us to lose money by buying too early.
2. How to Identify Bear Trap and Bull Trap
Bear Trap: When the price drops but without strong trading volume, and RSI is in the oversold region, but the price does not continue to fall.
Bull Trap: When the price rises but trading volume does not follow suit, and RSI is overbought, but the price fails to maintain the uptrend.
3. How to Avoid Falling Into These Traps
Use Stop-Loss: Set stop-loss orders at key support and resistance levels to protect your account if the market moves against your expectations.
RSI: Use RSI to identify when the market is overbought (Bull Trap) or oversold (Bear Trap), helping you make better decisions.
EMA: Use moving averages like EMA 50 and EMA 200 to determine the main market trend and avoid being misled by “false moves”."
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A place that gives you value and free knowledge 👉t.me/+U2u92reheCw4N2Vl
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.