Nice to meet you, friends! I’m a 25-year-old from South Korea who started trading a month ago. You can call me Ham. Since I don’t have a mentor, I came here to ask some questions. Your answers would be incredibly helpful to me! I anticipated that the crypto market would remain bullish until May-June next year. My reasoning is based on factors such as the current Bitcoin dominance, Ethereum dominance, and the accumulation patterns of altcoins (analyzed through charts). However, I currently believe that the market will shift to a short-to-mid-term bearish trend following the Fed's interest rate cut announcement on the 19th and lasting until January 20th. I built short positions in the crypto market and managed to make profits over two days. While studying the book Market Wizards, I came across the strategy, 'Break the weakest link in the market,' which sparked my interest in data. I calculated the decline rates of all Binance-listed tokens from 4 a.m. on the 19th to 9 p.m. on the 20th (price_drops.csv). After identifying the token with the largest drop during this period, "PNUT," I analyzed its chart(ILLUSTRATION). I discovered that "PNUT" was forming an accumulation pattern, and I thought, 'Ah, as I suspected!This is just a temporary downturn, and those in the know are using the dip to accumulate.' But then I wondered, 'Am I falling into confirmation bias? Could it be that only continuous declines lie ahead, and I’m the only one expecting a bullish market?' What I want to ask is this: 'If an accumulation pattern is appearing, does that necessarily mean someone is accumulating during the downturn? Or could this kind of accumulation be a deception?' If you could provide an answer, I would truly appreciate it and wouldn’t forget your kindness. Thank you very much. P.S.: In Korea, the Fed's announcement was at 3:50 a.m. on the 19th, so there might be some confusion about the time. I considered converting it to U.S. time, but since not everyone here might be based in the U.S., and given the wide range of time zones within the U.S., I decided against it. I apologize for not making the adjustment, but if you have a preferred time zone, I’ll be happy to accommodate it in the future. [ILLUSTRATION 1]
It is almost impossible to know if market makers are accumulating or distributing until they stop doing it, and there is a confirmation. Since you are using Trading View, here are a couple of links that might help. https://www.investopedia.com/terms/a/accumulationdistribution.asp https://www.tradingview.com/scripts/accumulationdistribution/ You can look at Volume Spread Analysis to understand if a price is being manipulated by market makers or if there is actual demand for it from the rest of the market participants. If a move in price is not backed by the corresponding volume, market makers are behind it. That is why a good volume indicator is essential if you are going to do a technical analysis on A/D. Brokers know this and they ask for a fee to provide proper volume indicators. So be careful and look for an external data provider that does not have a conflict of interest.
All things in measure: Fed announcement dominates all, so anything else is aftershocks, such as "risk off". You can find the same pattern in all risk assets. Trying to read into muddy waters is a waste of time. Better to focus on how to deal with muddy waters tactically, than try to read longer term directions.
Sounds more like you are thinking critically about market. Accumulation pattern could indicate accumulation but it can be trap. Therefore I prefer to watch for further confirmation before jumping in. What other factors are you considering before making your next move?
Thank you for your response. After reading through the replies, I realize that I might be asking questions without fully understanding what I dont know yet, which might have been frustrating for you. Nevertheless, I sincerely appreciate your kind and thoughtful answers. I interpreted the "muddy waters" you mentioned as situations where multiple programs and algorithms are trading in a highly technical manner, making analysis less meaningful. Based on that, I understood your suggestion as implying that analyzing such situations might not be productive. However, until now, I believed that to respond tactically, the first step should be to analyze and understand the current situation. To the end, I've been trying to grasp chart patterns and trading volumes to better understand the present context. If responding tactically in technical analysis does not start with understanding the current situation in this manner, could you please share what procedures or approaches I should follow to better respond?Are there any resources or materials I could learn from? Whishing you a happy and prosperous new year!
Thank you for your response. After reading your reply, I realized that i lack the knowledge to identify and confirm additional evidence. i will make sure to study more and imporove my understanding. Wishing you a Happy New Year!
Thank you! in Korea, there are very few people who introduce these kinids of technical indicators, so I learned through you that there are information channels where I can explore such resources. I will make sure to dive into these links and study hard. Wishing you a Happy New Year!