Dead Cat Bounce ScenarioHello, dear subscribers!
Today we are going to examine a very interesting chart pattern which can help you to find the hidden danger in the market.
The dead cat bounce is the reverse bearish pattern, hence the market should be in the uptrend before it's formation.
After the swing high point is reached the sharp price drop usually follows. When we are able to identify the swing low we shoud measure the first bounce height. For this purpose we can use the Fibonacci retracement levels from the swing high to the swing low.
For the traditional markets it is typically used the 0.5 Fibonacci level, but on the cryptomarkets the 0.61 level can be used too due to high volatility.
If the price was unable to close above this Fibonacci level during the first bounce, there is a high probability of dead cat bounce scenario, when the price continue to fall and the global downtrend changes the uptrend.
We use the current Bitcoin price action to illustrate this pattern. There is a big danger now to execute exactly this scenario. Please, be careful!
DISCLAMER: Information is provided only for educational purposes. Do your own study before taking any actions or decisions.
