Main players commonly use 'lure signals'; learn to distinguish them to avoid being a 'leek'!
Tip 1: See through the 'false breakout trap' — trading volume is the 'mirror'!
Characteristics of the lure signal:
The price suddenly breaks through the resistance level, but the trading volume does not keep up (volume shrinks), and the candlestick looks like a 'lone commander'.
After a breakout, it quickly falls back and fluctuates below the resistance level, forming a 'super long upper shadow' deceptive candlestick pattern.
Practical case: a certain cryptocurrency suddenly surged 5% and broke the previous high, but the trading volume was only 60% of the previous day; 30 minutes later, it plummeted back to the original point, a typical main player 'testing the market to lure more buyers'!
True breakthrough signal:
Volume breakout (trading volume is more than 1.5 times the previous day), price stabilizes above the resistance level for more than 2 hours.
After a breakout, a pullback that does not break below the resistance level (at this time, resistance turns into support) forms an 'effective breakout'.
Tip 2: Keep a close eye on 'key support and resistance levels' — the main players love to 'perform' here!
Characteristics of the lure signal:
The support level is repeatedly 'falsely broken': the price briefly breaks below the support line and quickly rebounds, forming a 'lower shadow line probing the bottom', tricking you into cutting your losses.
Resistance level 'fakes a shot': it rises to near the resistance level and then falls back, testing multiple times but not really breaking through, draining retail investors' patience.
Key points for trend breakthroughs:
Use the 'Fibonacci retracement line' to draw key levels (0.618, 0.786 are strong resistances).
Combining with the 'Bollinger Bands': the price must break above the upper band and the Bollinger Bands must widen to indicate a strong trend starting.
Tip 3: Beware of the 'indicator divergence trap' — don't be fooled by technical analysis!
Characteristics of the lure signal:
The price reaches a new high, but the MACD and RSI indicators do not make a new high (top divergence), indicating insufficient upward momentum, which may mean that the main players are pulling up the price to sell.
The price reaches a new low, but the indicators do not reach a new low (bottom divergence), which may indicate that the main players are dumping to accumulate.
Correct usage:
After a divergence appears, do not immediately place a trade! Wait for 'indicator recovery + price confirmation':
For example, after a top divergence, the price confirms a downward trend only when it breaks below the previous low; after a bottom divergence, the price confirms an upward trend only when it breaks above the previous high.
Practical trading motto (memorize!):
'Volume and price rise together to chase the rise, breakouts with shrinking volume should exit quickly;
Look at support and resistance multiple times; wait for confirmation after divergence!
Final reminder: the cryptocurrency market trades 24 hours, and the main players love to launch surprise attacks in the early morning and on weekends!
It is advisable to set 'conditional orders': for example, if the price breaks above XX dollars and the trading volume > XX, then automatically buy, to avoid being influenced by emotions while watching the market ~
I am Wenhua, a professional analyst and teacher, a mentor and friend on your investment journey! As an analyst, the most basic thing is to help everyone make money. I will help you solve confusion and trapped positions, speaking with strength. When you lose direction and don't know what to do, follow me, and Wenhua will point you in the right direction.
Continue to pay attention;$BTC $ETH $XRP
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