Bitcoin - Bull flag or Bull Trap?

Not financial advise. Do your own research. The ideas shared here are the personal opinions of the BitDoctor team. Trade at your risk.

After such a decent push in price it's no doubt you're all seeing everyone and their mother talking about this little bull flag we're seeing. My focus here is to discuss the potential that we may break out of this bullish and if that happens, where we might end up.

First off, we need to look at prior trends, including the big December impulse. When we look at the volume of the December impulse, you will notice 4H block after 4H block. Bullish impulse waves require sustained volume. That's what happened in December. It is not what is happening today. Also, the December impulse took much less time for the next impulse vs where we're at today. The lack of buying interest is astonishing. We are experiencing distribution here.

Second, let's compare long and short positions back in December compared to today. There were way more short positions compared to today. On December 16 the ratio was about 88% longs vs shorts and today that ratio is about 132%. That's after the short squeeze we experienced that caused the massive volume candle.

Third, let's look at the time between one impulse and the next. We've been slowly bleeding with the exception of that one green 4H candle that was followed up with a big red candle... with even more volume. That would be the rejection at about $3650 that I'm referring to.

So although a breakout of this "bull flag" is likely, since we're being defended at the 61.8% retracement of the larger structure, we'll likely continue to see some resistance at $3765 and further around $3800. I don't expect much beyond that for this impulse.

Lastly, we can see a bunch of bullish divergence alerts popping off then bearish divergence before the big dumps. We haven't seen bearish divergence on 4H charts yet but it has shown up on 1D timeframes. I'd like a little more confluence before making a definitive decision but at a minimum I think we'll range here between 3550 and 3700 for a while.

Trade the breakout. Not the risky trade. The only volume we've seen so far has been red volume with very little green volume comparably speaking.

Trade safely friends.
<3 -CE-