How should we analyze ETHUSDT? I have written about the reasons
Ethereum has been the most talked-about asset during this downturn.
↪ Each time it showed a decline, the drop was sharp and rapid, consistently forming new lows. As a result, it has significantly lost trust among retail investors who were primarily focused on buying.
Here is the daily chart of Ethereum.
The overall structure and range are formed using two supply zones as key levels along with a single range.
I am currently using two key levels as my primary reference:
1. The support zone that held during the decline in early February.
2. The resistance zone that formed when the previous low was broken.
✔ Despite the new low being established, I have set the range as shown above because it is still too early to confirm a complete breakdown of the lower range.
✔ As shown in the chart above, we have yet to see a full-body candle close below the lower range. Additionally, the key level at the bottom continues to provide support.
If we do see a decisive full-body close below the lower range and the key level no longer holds as support, we can conclude that the liquidity sweep at the lower range has failed to remove sufficient liquidity.
A Range Sweep typically occurs when there is a well-defined range with clear highs and lows. It refers to a scenario where price temporarily breaks out (or breaks down) beyond this range but closes back inside, leaving a wick.
This movement goes by different names, such as Range Sweep, Stop Hunt, and Fake Out, but they all serve a distinct purpose.
The Role of Smart Money in Liquidity Sweeps
Market-controlling entities, often referred to as Smart Money, tend to move in the opposite direction of retail traders. Their primary objective is to eliminate as many retail positions (liquidity) as possible before triggering a sharp price reversal.
Retail traders generally follow simple trading patterns:
• They tend to chase price moves, entering long positions as the price rises and short positions as it falls.
• They often place stop-loss orders at the most recent swing high (for shorts) or swing low (for longs).
Smart Money exploits this predictable behavior by targeting these stop-loss orders to clear liquidity and then reversing the price direction.
Key Liquidity Concepts
• BSL (Buy-Side Liquidity): Liquidity from short positions’ stop-loss orders resting above key highs. If price touches these levels, a reversal may occur.
• SSL (Sell-Side Liquidity): Liquidity from long positions’ stop-loss orders resting below key lows. If price touches these levels, a reversal may occur.
Liquidity Sweep in Action
Liquidity sweeps follow this mechanism:
1. Price breaches a key level (either a high or a low).
2. Stop-loss orders trigger, increasing liquidity.
3. Smart Money absorbs liquidity and reverses price direction.
Understanding this concept and identifying liquidity sweeps in real-time can significantly enhance your market analysis and trading strategies. Keep an eye on these setups, as they can provide high-probability trade opportunities.
The explanation about liquidity sweeps became a bit lengthy in the middle.
Ultimately, I still see Ethereum’s current price action near the daily low as part of an ongoing liquidity removal process. If it breaks above the trendline resistance and the key level within the internal range supply zone, signaling a trend shift, we could target a move up to the range high of $4,100.
▩ Key Takeaways from This Perspective: The Method and Purpose of Liquidity Sweeps
To successfully trade the movements that follow liquidity sweeps, it’s crucial to understand that positions should not be taken during the liquidity removal process itself.
If liquidity is being swept on a higher time frame (HTF), the top-down analysis approach should be used to identify reversal price action on the middle and lower time frames (MTF, LTF) before entering a trade.
In my next analysis, I will likely discuss how to correctly follow price reversals after liquidity sweeps and how to position accordingly.
Thank you.
↪ Each time it showed a decline, the drop was sharp and rapid, consistently forming new lows. As a result, it has significantly lost trust among retail investors who were primarily focused on buying.
Here is the daily chart of Ethereum.
The overall structure and range are formed using two supply zones as key levels along with a single range.
I am currently using two key levels as my primary reference:
1. The support zone that held during the decline in early February.
2. The resistance zone that formed when the previous low was broken.
✔ Despite the new low being established, I have set the range as shown above because it is still too early to confirm a complete breakdown of the lower range.
✔ As shown in the chart above, we have yet to see a full-body candle close below the lower range. Additionally, the key level at the bottom continues to provide support.
If we do see a decisive full-body close below the lower range and the key level no longer holds as support, we can conclude that the liquidity sweep at the lower range has failed to remove sufficient liquidity.
A Range Sweep typically occurs when there is a well-defined range with clear highs and lows. It refers to a scenario where price temporarily breaks out (or breaks down) beyond this range but closes back inside, leaving a wick.
This movement goes by different names, such as Range Sweep, Stop Hunt, and Fake Out, but they all serve a distinct purpose.
The Role of Smart Money in Liquidity Sweeps
Market-controlling entities, often referred to as Smart Money, tend to move in the opposite direction of retail traders. Their primary objective is to eliminate as many retail positions (liquidity) as possible before triggering a sharp price reversal.
Retail traders generally follow simple trading patterns:
• They tend to chase price moves, entering long positions as the price rises and short positions as it falls.
• They often place stop-loss orders at the most recent swing high (for shorts) or swing low (for longs).
Smart Money exploits this predictable behavior by targeting these stop-loss orders to clear liquidity and then reversing the price direction.
Key Liquidity Concepts
• BSL (Buy-Side Liquidity): Liquidity from short positions’ stop-loss orders resting above key highs. If price touches these levels, a reversal may occur.
• SSL (Sell-Side Liquidity): Liquidity from long positions’ stop-loss orders resting below key lows. If price touches these levels, a reversal may occur.
Liquidity Sweep in Action
Liquidity sweeps follow this mechanism:
1. Price breaches a key level (either a high or a low).
2. Stop-loss orders trigger, increasing liquidity.
3. Smart Money absorbs liquidity and reverses price direction.
Understanding this concept and identifying liquidity sweeps in real-time can significantly enhance your market analysis and trading strategies. Keep an eye on these setups, as they can provide high-probability trade opportunities.
The explanation about liquidity sweeps became a bit lengthy in the middle.
Ultimately, I still see Ethereum’s current price action near the daily low as part of an ongoing liquidity removal process. If it breaks above the trendline resistance and the key level within the internal range supply zone, signaling a trend shift, we could target a move up to the range high of $4,100.
▩ Key Takeaways from This Perspective: The Method and Purpose of Liquidity Sweeps
To successfully trade the movements that follow liquidity sweeps, it’s crucial to understand that positions should not be taken during the liquidity removal process itself.
If liquidity is being swept on a higher time frame (HTF), the top-down analysis approach should be used to identify reversal price action on the middle and lower time frames (MTF, LTF) before entering a trade.
In my next analysis, I will likely discuss how to correctly follow price reversals after liquidity sweeps and how to position accordingly.
Thank you.
AI 머신러닝을 통한 데일리 리포트(일 2회, Ai 추천 포지션 포함), 개인적인 관점 등 다양한 내용을 확인할 수 있습니다.
텔레그램 채널:
t.me/trading_boys_first_worldwide0831
텔레그램 채널:
t.me/trading_boys_first_worldwide0831
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
AI 머신러닝을 통한 데일리 리포트(일 2회, Ai 추천 포지션 포함), 개인적인 관점 등 다양한 내용을 확인할 수 있습니다.
텔레그램 채널:
t.me/trading_boys_first_worldwide0831
텔레그램 채널:
t.me/trading_boys_first_worldwide0831
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.