BTCUSDT - Watch out for Stop Hunting ❗

22 Jul 2022

Hi Traders, Investors and Speculators

Ev here. Been trading crypto since 2017 and later got into stocks. I have 3 board exams on financial markets and studied economics from a top tier university for a year.

A quick look at Bitcoin / BTC . I believe that we are currently in the market cycle of accumulation , according to the Wyckoff Method market phases. The four phases of the market cycle are accumulation, markup, distribution, and markdown.
During the accumulation phase, a new cycle begins that generates a trading range. This often creates a strong resistance zone / failure point / spring . This is the precursor to another bull cycle, but it can last an extended period of time. The final moments of this phase will attract algorithm trading driven stop hunting , often observed near downtrend lows, where price drops just underneath key support and then triggers a sell-off. This is followed by a recovery wave that lifts the price back above support.

So - What Is Stop Hunt ?
Stop hunting is a strategy that attempts to force traders out of their positions by driving the price of an asset to a level where many people have chosen to set stop-loss orders. The triggering of many stop losses at once typically creates high volatility and this is often very obvious during the accumulation phase of the Wyckoff Method.

If we take all of the above into consideration, the price of Bitcoin can still drop and rise (within a range) multiple times until a clear bottom is established and the next markup phase / bull cycle starts. In this chart, I have identified the zones that we may likely experience range trading in. This will be the first immediate resistance zone and the first immediate support zone. It is also possible to experience stop hunting, where the price may rise just above resistance or fall just below support to take out stop losses.

Incase you're interested, here I did an analysis on Bitcoin / BTCUSD / BTCUSDT using the Wyckoff Method:

I also used a similar method on Cardano / ADAUSDT here:

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