💵 How Big Players Capture Liquidity
Friends, many of you are likely either trading in the crypto market or simply holding an investment portfolio, so here's a useful post for you.
🔤 If you've ever watched charts, you've probably noticed this pattern: the price approaches a level, seemingly breaks through it, but then sharply reverses back.
This can be described in three phrases: false breakout, stop-loss hunting, and liquidations. But let's break down why this happens.
🔖 The Nature of a False Breakout
A false breakout occurs when the price breaks a significant level, but instead of continuing in that direction, it quickly returns.
— It often happens during sideways market movement.
It's no secret that for a price to rise, buyers are needed, and for it to fall, sellers. This is why major players are always looking for where the main liquidity and stop-losses are concentrated.
They move the price to gather as many orders as possible before creating a real market move.
🔎 What Happens When Stop-Losses Are Triggered?
1️⃣ The price moves toward a level where there are a lot of orders. Traders see this and place their positions.
2️⃣ Stop-losses accumulate behind the level. For example:
— Short sellers place stops above resistance. — Long traders place stops below support.
3️⃣ Large players see these stop orders and create a false move:
— In the case of a false breakout upwards — Market Makers push the price above resistance, triggering short traders' stop orders. Their liquidations create forced buying, which pushes the price higher in the short term
— In the case of a false breakout downwards — the price breaks through support, and long traders' stop-losses turn into market sell orders.
After the stops are triggered, the price quickly reverses because major players have gained liquidity to enter the opposite position.
💬 But what should those who are encountering these formations for the first time do?
In trading, your best teacher is experience. However, here are some recommendations:
1️⃣ Wait for a Retest
A retest (return to the level) helps confirm the true direction of the price movement.
Useful tools:
•
Resonance – tracking clusters;
•
ATAS – tracking volume analysis and order flow.
2️⃣ Watch Liquidity and Clusters
Liquidity is the fuel of the market. Major players move the price where the most orders are concentrated.
Useful tools:
•
Bookmap – liquidity and volume visualization;
•
Hyblock – monitoring liquidations and liquidity zones.
Use these tools, learn, observe yourself, and over time, you'll see how the chart becomes more readable.
❕ Keep in mind that in crypto, 70% of the time the market is in a sideways trend, and only 30% of the time is it moving. The question is not whether you’ll catch the breakout, but whether you'll be able to recognize it in advance
.
Do you trade crypto?
🔥 — Yes, actively
🧐 — No
🐳 — I would like to learn
CRYPTO TREYSI | Subscribe
