$SOL These sharp spikes/mechas in both directions are designed to hunt the liquidity of retail operators or "cuchis".
In assets with reduced liquidity and high volatility on short timeframes (15m and 1h), it mainly happens for three reasons:
Bait & Stop Hunt (Stop Hunting): They temporarily break through resistance or support to trigger the Stop Losses of those who are short/long, and at the same time induce retail traders to enter out of FOMO (false breakout).
Liquidity Sweep: Institutions and market makers need the counterparty to those orders to fill their liquidity blocks before pushing the price in the opposite direction.
Liquidation of Leveraged Traders: In perpetual contracts, those lightning moves clear the order books on both sides of the range.
To avoid getting trapped in these setups, it’s key to wait for the candle close (confirmation) before taking the trade entry, or to place Stop Losses with some slack outside the extreme wick zones. The market is cleaning out those of us with little capital with those sharp mechas
In assets with reduced liquidity and high volatility on short timeframes (15m and 1h), it mainly happens for three reasons:
Bait & Stop Hunt (Stop Hunting): They temporarily break through resistance or support to trigger the Stop Losses of those who are short/long, and at the same time induce retail traders to enter out of FOMO (false breakout).
Liquidity Sweep: Institutions and market makers need the counterparty to those orders to fill their liquidity blocks before pushing the price in the opposite direction.
Liquidation of Leveraged Traders: In perpetual contracts, those lightning moves clear the order books on both sides of the range.
To avoid getting trapped in these setups, it’s key to wait for the candle close (confirmation) before taking the trade entry, or to place Stop Losses with some slack outside the extreme wick zones. The market is cleaning out those of us with little capital with those sharp mechas