$USUAL The technical phases of a dump (rapid and often brutal drop in the price of an asset) generally follow a logical sequence that can be anticipated or analyzed with technical indicators and market behaviors. Here is a detailed analysis of the phases of a dump:
1. Accumulation and preparation (Pre-dump phase)
Features :
Before the dump, important actors (often whales or insiders) begin to accumulate or manipulate the asset.
Massive buy orders (buy walls) artificially support the price.
Volume stable or slightly increasing to maintain interest.
Appearance of a bull market to attract additional investors (FOMO).
2. Discharge phase (Initial Dump)
Features :
Whales and influencers are starting to sell massively.
A cascade of sales is triggered, amplified by stop-losses placed by individual investors.
Volume explodes lower with significant red candlesticks.
Panic in the market.
3. Temporary stabilization (Dead Cat Bounce)
Features :
After a significant initial drop, the price rebounds slightly (technical pullback or "Dead Cat Bounce").
This rebound attracts buyers thinking that the decline is over.
In reality, this only allows the remaining sellers to liquidate their positions.
4. Secondary Dump (Capitulation)
Features :
The second dump is often more violent than the first. It corresponds to a phase of capitulation where the last buyers give in under pressure.
Final stop-losses and liquidations of margin positions accelerate the decline.
Feeling of despair in the market.
5. Consolidation (Phase post-dump)
Features :
After the capitulation, the market seeks a point of equilibrium. The price stabilizes around a technical support zone.
Volumes are decreasing considerably.
Long-term investors are starting to return, but volatility remains high.
6. Resumption or continuation of the decline
After consolidation, two scenarios arise:
Bullish Resumption: If the project shows strong fundamentals or positive news, buyers return, leading to a gradual recovery in price.
Prolonged decline: If confidence is eroded or the project loses its attractiveness, the price may continue to decline slowly, creating a long-term downtrend.
Conclusion
The dump is a dreaded but often predictable phase thanks to technical indicators and order book analysis. To avoid suffering a dump, it is essential to:
1. Watch for warning signs (high RSI, suspicious volumes, fictitious buy walls).
2. Place smart stop-losses to limit losses.
3. Avoid trading during periods of high volatility (especially for beginners).
Each phase of a dump is an opportunity for experienced traders to take advantage of the moves, but this requires excellent risk management.
