The price of Bitcoin (BTC) surged above $18,000 on Nov. 29, reaching as high as $18,209 on Binance. However, traders are turning cautious despite BTC’s weekend rally.
Bitcoin currently faces resistance at around $18,200, which is also the 10-day moving average (MA) on the daily chart. As Cointelegraph reported yesterday, some traders still anticipate BTC to see another drop in the near term before the rally can continue.
Why a bull trap for Bitcoin now?
A pseudonymous trader known as “Crypto Capo” predicted Bitcoin would see a relief rally to $18,000 as it dropped to the $16,000 region.
On Nov. 27, when the price of Bitcoin was still hovering at around $16,700, the trader said he is ready to short $18,000.
He added that he is now starting to hedge at $18,100 with plans to cut the hedge if the trend reverses. In the near term, the trader noted that the first confirmation of a correction would be a drop to $17,400. He said:
“Starting to build a hedge position. I don’t want to sell some alts bags because the entry was very good, so hedge is a better option here. Invalidation for the hedge is clear.”
If Bitcoin continues to drop below $17,400 and eventually $16,800, the trader said a drop to the $14,000 region would become likely.
But, if Bitcoin rises above $18,400 and consolidates at around $18,200, that would invalidate the bearish structure. Crypto Capo also noted that consolidation above $19,000 would completely invalidate the bearish setup.
Another pseudonymous trader known as “Loma,” who discussed a bullish structure for Bitcoin at $17,500, said he has cut half of his long position.
The trader emphasized that BTC is nearing resistance as it looks to close its weekly and monthly candles. Considering that the $18,200-$18,400 area remains a resistance range, the trader said:
“Closed half of long at $18,080~ Not looking to be too overexposed into resistance coming into the weekly m/monthly closes. Lots of buying opportunities if we do break $18.4~ Not a lot of selling opportunities if we don’t.”
There is a counter bullish scenario for BTC
A technical analyst called “CryptoBirb” said that Bitcoin typically faces two types of correction: 15% and 30%.
The analyst said that he expects a pullback to $14,000, but also noted that this is not guaranteed. He pinpointed various technical indicators, including BTC being in oversold territory for the first time since the rally began. He wrote:
“There are two major $BTC correction types: -15% & -30% declines. While anticipating~14k region, I noticed it’s the first return to the mean and first oversold bullish momentum cross since the rally started – VERY strong signal. Wouldn’t mind ATH before Christmas. Who’s with me.”
The bullish scenario for Bitcoin would still require BTC reclaiming $18,400 and consolidating above it to confirm the new support levels.
Popular trader filbfilb, meanwhile, said that he is currently in cash as market uncertainty is calling for increased risk management.
“In the event of a breakdown below $15K and a flip of previous support into resistance, that may present a straightforward short opportunity,” he wrote on Sunday in his weekly newsletter.