1/ MINI-THREAD on Psychological PA after drop📚
A lot of the time after such a severe dump a lot of bulls realize they were on the wrong side and wanna desperately get out on a retest
I've seen this countless times where price simply doesn't give this retest on the first try
2/ Instead, it creates false hope, front-running the area on the lower time frame resistances and creating another two or three legs/swings lower on the lower timeframes making all the bulls really anxious and selling their position as they psychologically can't take it anymore.
3/ At that point they are selling right into a higher TF support or close to it based on their emotions.
Price reacts to this heavy market selling and retraces above the next logical point of liquidity.
Right to a place they wanted to sell in the first place
4/ However at this time the mentality is different.
They are no longer looking to sell but rather are scared of price running without them. After all, it's been a rather bigger bounce.
You can see some jumping back in at that point. That's right, into a higher TF resistance.
5/ Right there that's exactly what the smart money needed to get their desired liquidity filled for their shorts.
Right at resistance. At that point, the market is truly ready to head another higher TF leg lower until a further level of liquidity is breached.
6/ Hope u did enjoy this mini thread of my take on what COULD happen.
By no means, this must happen but I have seen this pattern occur time & time again, and if it doesn't this time, it's still valuable to keep in mind for next time when it will.
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