Let me summarize some methods for washing the market. Generally speaking, the purpose of washing the market is to flush out indecisive retail investors in preparation for a subsequent rise. The methods of washing the market can be divided into:
1. Crash washing: Suddenly placing a huge amount of sell orders on the order book or directly crashing the market with large orders, driving the price down. A significant drop in a short time creates panic, and the trading volume suddenly increases. The goal is to force panic sellers and stop-loss orders to relinquish their holdings, filtering out holders.
Operational details:
Quickly breaking key support levels, such as moving averages or previous lows, to create panic. During the crash, some positions are bought back at a lower level. Often accompanied by false news and FUD (fear, uncertainty, and doubt) being released simultaneously.
2. Sideways fluctuation washing: Repeatedly fluctuating within a range, harvesting short-term traders back and forth. Prices fluctuate slightly up and down, trading volume gradually decreases, and the time is extended. This wears out short-term funds and causes impatient individuals to sell on their own.
Operational details:
Often quickly pushing back after a local rise, creating a 'false breakout' to deceive both bulls and bears. Holding investors feel 'hopeless' for a long time, leading them to automatically relinquish their holdings.
3. Spike washing: Suddenly experiencing a sharp drop with a long lower shadow in a very short time, then quickly pulling back. The candlestick pattern shows a 'spike' (long lower shadow), and the price returns to or near the original position. This quickly shakes off stop-loss orders, creating a moment of panic.
Operational details:
Typically, spikes are accompanied by on-chain order cancellations and liquidity harassment. The market maker supports at a lower level, and after washing the holdings, continues the original trend.
4. News-based washing: Using negative news and panic public opinion to create psychological impact. Retail investors feel panic and actively sell. This accelerates the washing out of holders, reducing selling pressure during the subsequent rise.
Operational details:
Commonly occurs just before a rise when negative news suddenly breaks out, such as controversies involving the project party or abnormal on-chain data. In reality, these negative factors have little impact; they are mainly used to wash out investors.