Cryptocurrency Market Manipulation Techniques: The Essence of Resistance and Support Levels!
1. Formation of Resistance Levels
Retail Investor Collective: When the price traps a large number of retail investors at a certain high point, these trapped investors will form a "numb holding position".
Unwinding Selling Pressure: When the price rebounds to that position again, retail investors will concentrate on selling to cut losses, creating strong selling pressure, thus establishing the resistance level.
Human Nature Weakness: Holding on during losses and rushing to sell when breaking even, reinforcing the resistance level effect.
2. Formation of Support Levels
Bullish Sentiment: In an upward trend, the previous high position (the cost area of retail investors who chased the price) has a low willingness to sell due to bullish market sentiment.
Supply and Demand Balance: When the price pulls back to that area, buying interest surges, forming support.
3. Common Techniques of Manipulators
Pierce, Withdraw, Pressure, Pull: False breakout (pierce), withdrawal of orders creates liquidity traps (withdraw), pressure to wash out positions (pressure), rapid surge (pull). However, manipulators in the cryptocurrency market evolve quickly, so beware of one-time traps for inducing long/short positions.
4. Key Insights
No Absolute Support/Resistance: Both depend on the existence of trends; when the trend breaks, they become ineffective. Simply drawing lines is meaningless; it must be combined with a trend framework.
Trend is King: All indicators (Bollinger Bands, MACD, etc.) lag behind K-lines and cannot predict the future.
5. Beware of Strategy Traps
The Truth About Trading Robots:
Many so-called "magical tools" in the market are merely backtested optimizations (fitting historical data), with real-time signals lagging or failing.
If AI could truly predict K-lines, the financial market would collapse. Valuable strategies are mostly for internal use, while those publicly sold are often tools for harvesting retail investors.
Human Judgment is Irreplaceable: Strategies need to be combined with subjective analysis of market sentiment, capital trends, etc.
Summary
Retail investors unite to form resistance, manipulators manipulate to break support.
Trend > Indicators, machines are inferior to humans.
Focus less on short-term trades, more on understanding longer cycles.
