Was Bitcoin’s Dip Below $40,000 The Ultimate Bear Trap?
Bitcoin's (BTC) price had a sudden break below the $40,000 significant psychological level, but the sell-off was short-lived, and the decline was quickly reversed. Investors are now asking whether the dip below the round number was the ultimate bear trap.
Bitcoin Bear Trap?
In technical analysis, the bear trap occurs when the market sells-off traps traders in believing that the uptrend is over and a possible reversal is underway.
In a bear trap scenario, the price often breaks below a support level or a key technical point.
The bears got the break below the $40,000 critical level, but so far, they definitely got burned by betting on the Bitcoin price crash.
The technical landscape can give us more clues about whether BTC can hold above $40,000.
Stochastic Oversold
First, the Stochastic oscillator bounced from oversold reading, and it expanded higher along with the price.
Secondly, we have a hidden bullish divergence between the stochastic oscillator and the price. The hidden bullish divergence is a bullish reversal signal that occurs when the price makes a higher low while the indicator makes a lower low.
Should BTC's price continue to rally out of its low, the following essential resistance level lies closer to March's high of $48,240, followed by the $50,000, the next significant milestone.
