I'll explain how it works and how I use it personally.
1/11
So what does "Liquidity" mean?
While all three definitions are obviously correct, the bottom one is most relevant for us.
2/11
The levels I map out are often important pivots (reversal area's) with highs that haven't been touched in a while.
This means that there is most likely a lot of stop losses placed there. Because these are the most clear invalidation levels for most people.
3/11
In this case, price kept making lower highs so these highs are untouched.
We can likely conclude that above these highs, shorts have placed a lot of their stop losses.
That means that going ABOVE this level triggers these SL's and causes a lot of buying volume.
4/11
🔹Why would we go to those levels?
This is because price often seems to search for liquidity.
If you would want to fill a lot of orders (into the hundreds of millions), it's easier to push price up into these area's where a lot of liquidity will be. Vice versa for longs.
5/11
If you'd for example push price up above these highs, you'd then see buying volume coming in from:
1. Short stops/liquidations being triggered. 2. Breakout traders buying the break of the previous lower high.
6/11
After that, either one of two things happen:
1. If the volume is very high, we often see a big short squeeze happening which can extend quite high and makes for a nice pump.
These short squeezes can cause a snowball-effect which makes price go higher at every break.
7/11
2. If the volume for continuation isn't there. Or price was deliberately pushed into these levels just to sell into the buying volume. We often see these highs taken out only to then reverse afterwards and end up in more downside.
We also call this a Swing Failure Pattern.
8/11
Whatever happens is very situational. For example when breaking the previous cycle's all time high at $20K. Price saw a huge short squeeze and never came back to even retest the level to this date. This was due to the huge amount of buying pressure on breaking that level.
9/11
Of course all of this can also happen in the opposite way.
Untouched lows? There's likely a lot of liquidity in terms of long position stop losses placed beneath there.
Expect selling pressure to come in whenever price clears that level.
10/11
I hope this cleared it all up a bit and gives you a good idea of how I work with these levels.
I think it gives you a good way to look at things from another perspective. Not seeing these levels as just as "A resistance or support". It's often a lot more than that.
11/11
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I see many new people come on CT and get confused by everything that’s going on in here.
Many of us on here are traders so don’t let these short term predictions, be it up or down, trouble your own long term vision and believe too much.
1/6
I may not be bearish myself currently but I think I can speak for most people when I say that the people that are bearish here are only short/mid term bearish.
I doubt many of them are bearish on Bitcoin and Crypto as a whole for the years and decades to come.
2/6
It’s up to you to form your own ideas about the market and what timeframe you’re investing over.
Don’t let me, or anyone else influence you with our analysis for the next day or week. Especially if you were planning to hold for years to come.
3/6
Updated the Wyckoff schematic with how the chart would look if we were to go for a spring.
1/15
Starting off with: Yes, I know these ranges often take longer than just a few weeks and that a 4H accumulation/distribution is quite a low timeframe.
But I do believe that these ranges will take as long as necessary for the people doing the accumulation or distribution.
2/15
If supply would be dried up and the composite man thinks he has sufficient control of the supply within the range, there is no need to exhaust the supply more. It will likely only cost him more than he gets back.
If me, or other traders don't say up or down because we want to wait for more certainty. This is why.
In the current pattern it's a gamble which way price may go first. Even though you might have a prefrered bias, it's best to wait for a breakout and THEN enter.
You wait for the probabilities to be in your favor before entering the trade.
Both longs and shorts are a bad risk/reward ratio from where we are right now seeing it could literally go either way or you can get a sharper entry in at a better price.
As can be seen by the example, if we simply wait for a breakout to either side, we can get a proper long or short in with a R:R of over 2.5.
If we have then calculated the probability correctly, this trade should net us a profit in the long run.