Hello everyone, friends and trading colleagues. Today we will consider the options for the development of events if we observe on the chart price exit from the accumulation zone… Someone calls the accumulation zone sideways, someone flat. But no matter how we call this zone, traded volumes accumulate here. Large capital cannot sell or buy the planned volume of an asset in one transaction. If the player tries to do this, the market will definitely move. Then it is no longer possible to perform the operation at a profitable price for the player. Therefore, big capital works in small volumes, buying or selling at an attractive price. If the price moves away from the favorable mark, he leaves the market and waits for the price to return to the attractive area.
How long does flat last
Hardly anyone will give an unambiguous answer to this question. And no one has yet identified the regularities by which one can determine the duration of the sideways price movement. Each time it all depends on many factors. Indeed, according to statistics, most of the time the market is in the flat. Trend movements are strong and impulsive, but short-term. Many traders say that the price will move flat until the big trader completes his trade at an attractive price. This is partly true. But one should not forget that a major player is far from alone in the market. And if opposite interests of big capital intersect, someone leaves the market, expecting the price to return to the zone of their interest.
Volatility surges occur quite often in the market. The reason for this may be important economic news or some important world events. It should be borne in mind that the market is highly dependent on the psychological state of the main number of participants. Sometimes a public statement of a celebrity can serve as a driver for a surge in volatility and a sharp movement in prices. How great the cryptocurrency market shook recently after Elon Musk’s statement about the sale of Bitcoin. A surge in volatility is also observed when the price leaves the accumulation zone. At the same time, we can observe the trading of large volumes of the asset. We can use this moment in our trading. Trying to jump on a departing train is not worth it. It is necessary to wait for a short stop of the price in order to understand where its next stop will be.
Where to look for market entry points
When the price leaves the accumulation zone, it is imperative to take into account volatility and volumes. Do not forget about the so-called “false breakouts”. If the price goes beyond the boundaries of the flat, but at the same time there are no increased volumes, such a movement will not continue. If there is a surge in volatility and increased volumes are observed, you need to wait for the end of the first impulse. It is quite probable that the price will return to the boundary of the accumulation zone again. But more often there is a continuation of the movement towards the breakdown impulse. In this case, the price travels a distance not less than the length of the breakout impulse. You can try to enter the market at the end of the correction after the impulse. You can wait for the movement to stop and move to a new accumulation zone. As a rule, the price stops at strong levels that have already interacted with the price more than once. In any case, when making a trading decision, you need to follow the rules of money management.
June 30, 2021