Washout in the cryptocurrency market refers to the main force or dealer manipulating the price through a series of specific trading means to achieve the goals of cleaning up floating chips and consolidating control.

The main purpose of washout is to make ordinary players sell their chips at relatively low positions, and its methods involve long-term sideways oscillations, sharp declines, etc., to torment players' patience and confidence in holding chips, obediently handing over their low-priced chips to the main force, paving the way for a main rising wave.

1️⃣ The core purpose of the main force's washout

◽️ Exchanging hands for unexpected chips: Forcing early holders off the bus to prevent excessive profits, mid-way dumping to avoid threatening or impacting the main force's operational plans, thus avoiding excessive lifting costs for the main force or influencing smooth selling.

◽️ Continuously replacing holders at different stages: To heighten their holding costs, further reducing the pressure on the main force to lift the price in the future. By repeated washing, the average holding cost increases, which also helps the main force to sell off at high positions and prevent retail investors from getting scared off as soon as there are signs of selling.

◽️ High selling and low buying during the oscillation process: The main force can earn a portion of the price difference to compensate for the higher trading costs incurred during the rising phase. This increases their capital for future price lifts, boosts confidence, and makes it difficult for the market to understand the main force's cost and discern the positions for future selling.

◽️ Adjusting capital allocation: If the main force accumulates a large proportion of chips at the bottom, without leaving enough lifting power, they can sell at higher prices at the beginning of the washout, restoring lifting power.

◽️ Wait for opportunities to mature further: The main force uses washout oscillations to get players to sell in advance, reducing floating chips. When most chips are concentrated in the main force's hands, lifting the price becomes relatively easier, fundamentally paving the way for the main rising wave (selling).

2️⃣ Core methods of the main force's washout

It is almost impossible for retail investors to remain unwashed. As long as retail investors are still watching the market, the main force has a way to wash them out. Because if retail investors are not washed out to a certain extent, it will affect the main force's operational plan, which the main force does not allow.

The main force has many tricks to clean up retail investors. The three tricks that retail investors find most uncomfortable usually keep them restless under the main force's tactics.

🟨 'Grinding', the main force often uses the tactic of 'grinding' the bottom, extending the time, while the price does not rise. Rising 1U, dropping 2U, retail investors with low patience will be 'ground' out by the main force.

🟨'Pit', after experiencing 'grinding', still many retail investors haven't been washed out, the main force will dig pits and continue to wash out retail investors. The main force digging a 'pit' creates a rapid volume drop in price, causing a sense of breakdown with no visible bottom. This instills fear in retail investors, who do not know how long or how deep the price will drop. Many retail investors have been trapped by the main force and have no chance to climb out.

🟨 'Coercion and inducement'. After experiencing the above two tactics, if the washout has not reached the main force's ideal value, the main force will employ 'coercion and inducement' tactics again to wash out. 'Coercion and inducement' means that the main force raises prices to test the market, allowing retail traders to have a chance to break even or make a small profit, and then pull back naturally to force retail traders out.

Here are some common methods and characteristics of the main force's washout:

🔻1/ Suppressive washout

Suppression washout refers to the main force completing accumulation and large-scale testing before the market accumulates a lot of profit-taking. The main force uses investors' desire to take profits to suddenly suppress, causing the price to drop significantly, strengthening the market's panic atmosphere, shaking investors' confidence in holding, and forcing them to hand over their chips to achieve the goal of cleaning floating chips. The characteristics of this washout method are 'fast' and 'brutal', with rapid speed and significant decline, using fierce tactics. This method is usually carried out by powerful main forces with operational capabilities, mainly targeting those currencies that are speculative, have fast entry speeds, and have excessive short-term increases.

🔻2./ Sideways washout

Sideways washout, also known as platform washout, is characterized by the price forming a long-term platform consolidation pattern within a certain area. Targeting the weakness of market investors' impatience, the main force uses time to wear down the will and patience of followers, forcing them to hand over their chips. During the sideways period, retail investors' chips are fully exchanged in the trading platform, and trading volume gradually shrinks. This method is usually employed by weaker main forces, mainly using long periods of dull trends to wear down retail investors' confidence in holding, sacrificing time for space, making it the longest of all washout methods.

🔻3/ Oscillating washout

Oscillating washout combines multiple techniques of lifting, sideways movement, and suppression, and is the most commonly used washout technique by the main force. Its advantage is: compared to suppressive washouts, it can avoid losses of low-priced chips; compared to sideways washouts, it can shorten the washout time. The main force uses repeated oscillations to wash out, making market players unable to see the true intentions of the main force, disrupting their participation pace and rhythm, forcing them to be in a state of chasing rises and killing falls, thus being forced to exit and watch. This washout method is relatively confusing, with active trading volume, and the price maintains up and down oscillations within a certain area. In daily candlestick charts, it combines bullish and bearish patterns, often appearing as triangles, rectangles, flags, etc.

🔻4/ Pinning explosion contract washout

Recently, if the crypto market enters a phase of oscillating washout, price volatility significantly intensifies. The main force conducts washout through pinning explosion contracts, clearing out chips that are overly leveraged and lacking confidence, preparing for the next round of price increase. This washout method creates larger price fluctuations, allowing the main force to distribute at high positions or accumulate at low positions, thus obtaining greater profits. During this process, market sentiment fluctuates violently, weakening the pricing power of the spot market, easily leading to severe fluctuations and increasing trading risks for players.

🔻5/ Quick drop and quick rise washout

Quick drop and quick rise is also a frequently used washout method by the main force. This washout method generally targets uncertain chips and those based on technical analysis. The price quickly drops and then quickly reverses in a V shape, essentially confirming that the previous drop was a washout. This method creates panic among investors through rapid price fluctuations, leading them to hand over their chips.

To achieve the goal of getting most retail investors to exit without revealing flaws, the main force will adopt different washing methods based on varying market holdings and the changes in certain holders, as well as various objective conditions.

3️⃣ How to follow the main force's washout rhythm to enter

🟢 Narrow volume decrease at the bottom 'loom' oscillation

Feature: The price undergoes narrow oscillations in the bottom area, with trading volume gradually shrinking, forming a 'loom' pattern. The main force accumulates chips at this stage, waiting for the right moment to start the rise.

Operation: The main force uses positive news to increase volume and launch a large bullish line, starting the upward trend. At this time, investors should pay attention to changes in trading volume to confirm whether it is a signal for the main force's accumulation and subsequent launch.

🟢 Wide range of volume contraction oscillation at the bottom

Feature: The price undergoes wide oscillations in the bottom region, with upward movements limited and trading volume remaining low. The main force cleans uncertain chips in this way.

Operation: When the price breaks through resistance, retail investors often enter. At this time, the main force may continue to create volatility, further cleaning chips. Investors should pay attention to changes in trading volume after the breakout to confirm whether it is an effective breakout.

🟢 Gradual rise after stabilization on a technical level washout

Feature: After stabilizing on a technical level, the price begins to rise slowly, with trading volume gradually increasing. The main force gradually cleans uncertain chips in this manner.

Operation: Retail investors should enter early and hold, considering exit when a large bullish line appears. In this case, investors should pay attention to changes in trading volume to confirm whether it is a washout behavior by the main force.

🟢 Double bottom washout without volume increase

Feature: The price forms a double bottom pattern, alternating slight declines on the left and right bottoms, with trading volume maintaining low levels. The main force induces technical players to exit in this manner.

Operation: When the price breaks out with increased volume past previous highs, it's a good time to enter. Investors should pay attention to trading volume changes during the breakout to confirm whether it is a signal that the main force's washout has ended.

🟢 Quick drop and quick rise washout

Feature: The price rapidly declines and then quickly reverses upwards in a V shape, targeting uncertain and technical investors' chips.

Operation: When confirming a V-shaped reversal, investors can consider entering. In this case, investors should pay attention to changes in trading volume at the time of the reversal to confirm whether it is a washout behavior by the main force.

🟢 Continuous decline mode washout

Feature: The price continues to decline with trading volume gradually shrinking. The main force creates market panic in this way, cleaning up uncertain chips.

Operation: Investors should pay attention to volume changes, and when trading volume shows significant changes, it may be a signal of stabilization, at which point they can consider entering.

🟢 Small rises and small falls after a decline

Feature: The price enters a sideways state after a decline, with small increases and decreases, and trading volume slightly increases. The main force further cleans the chips in this way.

Operation: When small bullish and bearish bars stabilize with piling volume, consider building positions. Investors should pay attention to changes in trading volume to confirm whether it is a washout behavior by the main force.

🟢 V-shaped reversal washout

Feature: The price forms a V-shaped reversal, similar to a double bottom but without a right shoulder pullback. The main force creates a strong 'head and shoulders bottom' pattern in this way to prevent retail investors from entering.

Operation: Investors should pay attention to changes in trading volume at the time of the reversal, confirming whether it is a washout behavior by the main force. When the reversal is confirmed, they can consider entering.

🟢 Stabilizing and then gradually rising with low volume

Feature: After stabilizing, the price rises in small steps with low volume, maintaining low trading volume. The main force cleans uncertain chips through this method, showing a stable pattern.

Operation: Investors should hold assets and wait for a rise, paying attention to changes in trading volume to confirm whether it is a washout behavior by the main force. When trading volume shows significant changes, it may be a signal that the main force is preparing for an accelerated rise.

🟢 Pullback after a small buying frenzy

Feature: After a small buying frenzy in the market, the main force may conduct a washout to cool down the market and gather energy for the next rise.

Operation: A low-volume small bar pullback after a small buying frenzy is an excellent entry point. Investors can enter when they confirm an increase in trading volume after the pullback ends.

🟢 Volume change washout

Feature: During the washout process, the trading volume will usually gradually shrink. When the price begins to rise, the trading volume will significantly increase. If the trading volume is shrinking with each rally, it can be concluded that the washout is still ongoing; if one day the rally suddenly has increased volume, it may be a real breakout.

Operation: Investors should closely monitor changes in trading volume, and when there is an increase in volume, they can consider entering.

🟢 Dead angle accumulation mode

Feature: The main force quietly keeps buying chips during a downtrend, leading to a decreasing amplitude of price drops, or directly causing a rapid drop, forming panic selling. As the accumulation nears its end, retail investors have exhausted their chips, creating a dead angle between the downtrend line and the valley of the drop.

Operation: When encountering this type of currency, you can boldly enter, setting the stop-loss a bit below the lowest price of the dead angle.

When waiting to buy: After a rapid drop in price, short-term investors can analyze technical elements such as moving averages, trading volume, support and resistance levels comprehensively. If there is strong support during the trading session and positive buying appears, they can seize the opportunity to buy.

Already bought at a high position: Medium to long-term investors can ignore short-term fluctuations in the price, do not rush to buy during the upward process, and continue to hold their assets in anticipation of a rise.

Combine various indicators: Players can combine moving averages (MA), relative strength index (RSI), MACD, volume-price, and other technical indicators to comprehensively judge market trends.

Stand in the perspective of the main force, think about the main force's operational intentions, and then you can follow the pace to enjoy the benefits!

The cryptocurrency market is always repeating yesterday's story. The speculative sectors change, prices change, and the people buying and selling change, but human nature does not change.

Please remember: The washout is to pave the way for the initiation of the main rising wave, do not fall before dawn.

Let’s strive together!