Bull traps are a way by riggers to trap traders on the long side. There is nothing we can do about it but only to recognize these patterns to avoid being trapped by them. A bull trap would normally result in destroying the momentum on the stock cause a drastic decrease in share price in a short span of time.
These setups & patterns allow me to capitalize on the emotional side of bulls. When they are presented, chances of recovery on the long side are low. These are based off charts but discounting level 2 & tape but should serve as a guide nonetheless.
Bullish Pattern False breakouts:
HOD clear out & Intraday Resistance Soft clear out after backside move:
Multiple HOD & Resistance Rejections, Longs looking for breakout long, Wicks represent possible MM dumping into HOD & accumulating short position
Riggers showing their hands with Multiple Knife action & FBO:
PMH Clearout on ABVC
Premarket High is a level that almost every trader use as a breakout trade or to judge momentum continuation. Manipulators know this and often rig a breakout only to dump immediately onto retail. This setup is one of my best and profitable setups to short into as it likely achieves an All Day Fader.
What you should look out for is always stuffing candles (long upper wick candles) with stuffing volume or the highest volume. Once occurred, the stock is likely not able to rebound.
Microshelfs: When a stock gets temporarily propped over a key resistance or breakout level in order to allow the MM to unload shares into short covers; once the micro shelf is complete the bid is usually pulled and the stock’s price typically crashes
In conclusion, these setups have provided me with a lot of good short setups. But one must also not be greedy and cover in key supports or demand zones. Recognizing these setups also takes a lot of time and I implore everyone to track & record them down should you encounter any
Knives:
Always know that knife or kill candles likely destroys momentum, but most of the time there will be a slight bounce up, that's where you wanna exit your underwater long position quickly. If you're short, wait for it to pull back and slam short
Knives are likely to happen a lot in Low and Micro floats stock with Low Market Cap as MM is able to control a huge supply of shares and move the stock however they want it.
Riggers will paint picture-perfect charts, like a Bullish pennant that looks symmetrical and likely to dump it when it's about to breakout, bagging all the longs and breakout traders. The more textbook the chart looks, the likelihood of them pulling the strings.
So always be careful, only do dip buys and no breakout trades.
Sometimes you can predict before the knives happen such as HOD clearouts, micro shelf, choppy wicks action, topping volumes w bearish candlestick patterns and obvious s/r bounces & patterns.
Obvious S/R means that it has rejected it many times, allowing bulls to think buyers are in control at this particular level only for them to do a rug pull. Other times also include pushing the stock up to resistance and slightly breakout only to dump it down immediately.
Softside clearout on GRVI:
Obvious Bullish Patterns setting up such as Bullish Pennant, Ascending triangle, Bull flag.... only for them to either dump immediately when it looks like breaking out, or when it slightly breaks out and then dump. One must look at tape action and utilize hotkeys to get out when in long positions. Once these FBOs is initiated, chances or recovery is very slim.
Comments