Bear trap incoming with bearish cross-over on Weekly time-frame?

[dragonvslinux]

As referenced in this article, the 50 Week MA is due to cross the 100 Week MA within a couple of weeks based on their current trajectories to form a "bearish cross-over". As stated:

While in theory the upcoming bearish cross would imply strengthening of bearish momentum, the indicator has a perfect record of trapping sellers on the wrong side of the market

A few things to note with this bearish cross-over that's looking unavoidable in approximately 2-3 weeks:

• The so-called bearish cross-over has never happened with price below the 200 Week MA, signalling further weakness in price than previous cross-overs
• This has only happened twice before (2015 & 2019), so could easily be considered to have co-incidentally reversed price as opposed to being an established pattern
• This analysis isn't so different than the Pi Cycle bottom indicator that additionally uses bearish MA cross-overs to confirm market bottoms (ie a combination of price & time)

What are your thoughts about this bearish cross-over? Does it signify that Bitcoin has endured it's bear market for long enough in both time & price in order for a recovery, or will we still see further downside?

Bearish crossovers dated April 2015 and February 2019 proved to be contrary indicators – those that tell you to bet against the herd.

Personally I'm inclined to think it will further help to confirm a market low, given other indicators have already signalled a low in the market recently. On it's own, it otherwise doesn't amount to much imo.

[jackg]

I can't remember who it was last time but there have been other comparisons drawn between the current price movements, those in 2015 and 2019 and it seems quite an odd thing to have happened so quickly that we might instead of already had most of the bear market over (of course we could see like we did in 2020 and get another crash but, to me, bitcoin's price is looking a lot safer than it did for a while anyway - I think 2015 and 2019 were just very slow years price wise too).

This could also be due to major forks of eth and eos entering the news too which might be effecting both prices.

(of course it could also mean there's greater risk because there's much higher volume now too and a weaker price than those times but the high volume/high speed trade executions do look out of place to me for a bear market - unless too many whales just got a lot bigger and are using it to attempt trades/perhaps more risky ones too).

[dragonvslinux]

I can't remember who it was last time but there have been other comparisons drawn between the current price movements, those in 2015 and 2019 and it seems quite an odd thing to have happened so quickly that we might instead of already had most of the bear market over (of course we could see like we did in 2020 and get another crash but, to me, bitcoin's price is looking a lot safer than it did for a while anyway - I think 2015 and 2019 were just very slow years price wise too).

There are reasons for this based on time and price analysis at least. Ultimately, it all comes down to the double top and bullish momentum declining since April last year, over 16 months ago. For example price reached the 100 Week MA only 6 months after ATH at around $36K. Compared to 2018, it took 11 months from ATH to get there at $5.8K. This is why these signals are arriving earlier than some would expect. Of course if there was a blow-off top like in previous bull markets, then it's unlikely price would be nowhere anywhere near the 200 Week MA, nor the point of a bearish cross-over with the 50 & 100 WMAs, ie it'd take more time.

(of course it could also mean there's greater risk because there's much higher volume now too and a weaker price than those times but the high volume/high speed trade executions do look out of place to me for a bear market - unless too many whales just got a lot bigger and are using it to attempt trades/perhaps more risky ones too).

I think in many ways there is increased risk for sure, despite Bitcoin's bear markets being more predictable as time goes on - as price has a distinct pattern of recovering - the world in facing a recession, stock markets are looking unreliable, price is back below it's 200 Week moving average, etc. But ultimately, long-term investors favour high risk for high reward, so nothing changes there imo.

[EarnOnVictor]

What are your thoughts about this bearish cross-over? Does it signify that Bitcoin hasn't endured it's bear market for long enough in both time & price in order for a recovery, or will we still see further downside?

My thought is that the developments on Bitcoin are complicated for now, so extreme patience is advised before the decision of the crypto would unveil. It is bearish in the long-term picture and threatens to sell further, but the steam is low, so it might have a lot of false breakout at the crossover level before a final decision would be made. The daily chart is not helping either, it has been creating more short candles, which signifies that the market is not ready for any definitive movements at the moment.

The answer to your question should be clearer in a couple of days after it might have break away from its sideways movement. However, I would support a reversal from the bearish crossover if there is a weekly close above it.

[Tytanowy Janusz]

• This has only happened twice before (2015 & 2019), so could easily be considered to have co-incidentally reversed price as opposed to being an established pattern

But TA has like 100 years. There is no need to invent new indicators that worked or did not work last 2 times for bitcoin (most likely small sample error). There are indicators that work f.e. 60% times for all assets. For example rising wedge:
" In 82% of cases, the exit is bearish. - In 55% of cases, a rising wedge is a reversal pattern. - In 63% of cases, the pattern's price objective is achieved when the support line is broken. - In 53% of cases, the price makes a resistance pullback on the rising wedge's support line."
https://www.centralcharts.com/en/gm/1-learn/7-technical-analysis/27-chart-patterns/502-rising-wedge

Bear Flag Pattern (67.72% Success) The flag is a continuation pattern that can occur after a strong trending move.
Double Top Pattern (75.01%)
Head and Shoulders Pattern (83.04%)
https://samuraitradingacademy.com/7-best-price-action-patterns/

And when we are talking about moving averages. The most popular is golden cross and dead cross which is 50 day crossing 200 day. Not 50 week crossing 100 week. In fact its hard to find probability of success of this indicator on big sample (f.e stocks in last 100 years). Even if I'm wrong and 50 WMA crossing 100 WMA is a well known and well described indicator with known probability than the fact that it wasn't successful here in crypto last two times means nothing.

[fzkto]

I don't know what was said beforehand from various sources, but recently the market movement reminded me very much of a bull trap. when bitcoin went up to 22k and then fell sharply below 21k. Exactly the same pattern was seen in many altcoins. All of them pumped up in a matter of minutes and then deflated even lower than they were before the pump. Which could be indicative of a bear trap.

[suzanne5223]

I can't remember who it was last time but there have been other comparisons drawn between the current price movements, those in 2015 and 2019 and it seems quite an odd thing to have happened so quickly that we might instead of already had most of the bear market over (of course we could see like we did in 2020 and get another crash but, to me, bitcoin's price is looking a lot safer than it did for a while anyway - I think 2015 and 2019 were just very slow years price wise too).

This could also be due to major forks of eth and eos entering the news too which might be effecting both prices.

(of course it could also mean there's greater risk because there's much higher volume now too and a weaker price than those times but the high volume/high speed trade executions do look out of place to me for a bear market - unless too many whales just got a lot bigger and are using it to attempt trades/perhaps more risky ones too).

Yes, Bitcoin appears to be safer now than in the 2015 and 2019 years used in the drawn for comparison but when there's so much confidence in the market I do be scared of the unknown that may happen

I don't know what was said beforehand from various sources, but recently the market movement reminded me very much of a bull trap. when bitcoin went up to 22k and then fell sharply below 21k. Exactly the same pattern was seen in many altcoins. All of them pumped up in a matter of minutes and then deflated even lower than they were before the pump. Which could be indicative of a bear trap.

You have a point due to the market being unpredictable sometimes but the OP was making comparisons drawn of some years ago to the market trend and since Bitcoin always replicates its 4years cycles there's a huge chance that we will see something happening again though the trend may be different.

[buwaytress]

What are your thoughts about this bearish cross-over? Does it signify that Bitcoin hasn't endured it's bear market for long enough in both time & price in order for a recovery, or will we still see further downside?

I know it's easier to say this now that we actually (briefly) broke 20k support twice in the past 24 hours, really didn't help that Powell's speech seems to confirm that they're going to be stubbornly plugging up the dollar... but yeah, I think this helps to confirm that Bitcoin's bear pain is far from over -- definitely needs a longer time spent, and lower prices achieved.

And I agree with above sentiment of "new" indicators like this, unproven and even if happens once will need many more repeats for reliability.

[adaseb]

Honestly its either a bear trap or this entire move to $25K was a big bull trap. Its hard to guage the markets. Pretty much nothing happens unless there is some market news out. Nothing happened for the past few weeks until JPow speech. Before that it was the unemployment number and prior to that was the CPI print. Then there is the fed rate decision.

First the fed is hawish.... then they seem dowish... Doing nothing but playing tricks on the traders minds. Impossible to predict what will happen.

[dragonvslinux]

• This has only happened twice before (2015 & 2019), so could easily be considered to have co-incidentally reversed price as opposed to being an established pattern

But TA has like 100 years. There is no need to invent new indicators that worked or did not work last 2 times for bitcoin (most likely small sample error). There are indicators that work f.e. 60% times for all assets

This isn't inventing new indicators, using the 50 & 100 Week MAs has been done for over 100 years! It's been known as a popular enough bearish cross-over.

And when we are talking about moving averages. The most popular is golden cross and dead cross which is 50 day crossing 200 day. Not 50 week crossing 100 week. In fact its hard to find probability of success of this indicator on big sample (f.e stocks in last 100 years). Even if I'm wrong and 50 WMA crossing 100 WMA is a well known and well described indicator with known probability than the fact that it wasn't successful here in crypto last two times means nothing.

This is precisely why I'm questioning whether it's a bull trap. Because while it's a well known fact that these two MAs crossing bearish is bearish across asset classes, twice before it has been a bear trap. Obviously this doesn't mean it will be a bear trap again, but clearly it doesn't mean it's more likely t be bearish either, when twice before this hasn't been the case, in fact the complete opposite.

If it wasn't obvious, you can take any example of long-term MAs (whether on Daily or Weekly time-frame) and their crosses reflect bullish or bearish price structure, regardless of the MA value.

Honestly its either a bear trap or this entire move to $25K was a big bull trap. Its hard to guage the markets.

Yup, this is more of less the point here, well spotted. The move to $25K triggered a lot of long-term indicators to signal $17.5K as the low, even if not by any means a trend reversal or otherwise that price would re-test near lows. This would be the confusion many speculators have, that the low being in means price won't re-test lower levels for confirmation.

At the same time, the move back above the 200 WMA could end up being massive bull trap, and instead price will sink much lower.

[Beparanf]

I will believe on this if the current global economic issue is same on the year when this first kind of bearish cross over occur. This chart is factually have a point if we consider technical analysis alone as reference but it will be a different story when we apply fundamental analysis because there’s a lot of things that looming around crypto market and take note that the current market is already onboard institutional investors that has losing tons of money in there investment while they are the reason why this bear trap occur during that first year highlighted on the chart.

I don’t want to say that same pattern will occur but the current signal might be the opposite considering what’s the current condition of the market.

[OgNasty]

That chart does make it look like we’re scraping the bottom here. I can’t help but feel like we aren’t there yet. In the past cycles there was always one more leg down after accumulation started. I feel like we’re waiting for that last leg down now. Between ETH2.0 and mtgox, I am still thinking that we will get the leg down and that will be the start of a new bull cycle.