Quick analysis on a textbook bullish "Power of 3" setup on CHZUSDT
What is "Power of 3"
- Power of 3 setups occur when "smart/big" money is building a position and creating liquidity. Setups can be seen with bullish/bearish scenarios, today we will be digging into a bullish setup.
- While retail can enter positions as orderbook allows, smart money must use more complex methods to build a position. In a bullish scenario we can observe an accumulation zone, price will typically chop in a short range causing traders' bias/positions to flip flop, this is where smart money is building the bulk of their position. In the manipulation zone, price consolidates below a key broken point which will provoke seller/short interest, the added pressure allows smart money to further build the rest of their long position. Once smart money is positioned they want to provoke buyer/long interest (a reclaim of the broken S/R), this is where the expansion phase can begin. There is little to no resistance during the expansion phase because the bulk of short/sell pressure has already absorbed, because of this, expansion can be quick and harsh.
This is just a very quick summary, I urge you to DYOR on "Power of 3" setups and come to your own conclusions/plan
My Plan for this scenario
- I entered long at 0.1485 at the equal swing low of the consolidation area. Future entries could be a sweep of the same area 0.1475-0.1485 (which happened as this idea was being published), or a reclaim of the broken S/R
- T/P is initially in the 0.1740/0.1780 area, although I will be monitoring for a reclaim of the monthly open for confirmation of a continuation. If 0.1780 area is flipped and reclaimed, I will look to 0.22 and eventually 0.265 as HTF targets.
- Invalidation would be a break/close below 0.1450 or a breakdown on BTC
What is "Power of 3"
- Power of 3 setups occur when "smart/big" money is building a position and creating liquidity. Setups can be seen with bullish/bearish scenarios, today we will be digging into a bullish setup.
- While retail can enter positions as orderbook allows, smart money must use more complex methods to build a position. In a bullish scenario we can observe an accumulation zone, price will typically chop in a short range causing traders' bias/positions to flip flop, this is where smart money is building the bulk of their position. In the manipulation zone, price consolidates below a key broken point which will provoke seller/short interest, the added pressure allows smart money to further build the rest of their long position. Once smart money is positioned they want to provoke buyer/long interest (a reclaim of the broken S/R), this is where the expansion phase can begin. There is little to no resistance during the expansion phase because the bulk of short/sell pressure has already absorbed, because of this, expansion can be quick and harsh.
This is just a very quick summary, I urge you to DYOR on "Power of 3" setups and come to your own conclusions/plan
My Plan for this scenario
- I entered long at 0.1485 at the equal swing low of the consolidation area. Future entries could be a sweep of the same area 0.1475-0.1485 (which happened as this idea was being published), or a reclaim of the broken S/R
- T/P is initially in the 0.1740/0.1780 area, although I will be monitoring for a reclaim of the monthly open for confirmation of a continuation. If 0.1780 area is flipped and reclaimed, I will look to 0.22 and eventually 0.265 as HTF targets.
- Invalidation would be a break/close below 0.1450 or a breakdown on BTC
Trade closed: stop reached:
Trade hit S/L @ 0.1450
BTC showing weakness triggered the majority of alts to breakdown. 0.1450 (high time frame equal low) was a key area for buyers to defend. If you zoom in on lower time frames you can see it had a volatile reaction as stop losses fueled a large wick down, followed by a large wick up as limit buys were being filled. Ultimately we had a clean breakdown turning 0.1450 into resistance. I would expect a leg up to retest the area at some point soon, however this trade is invalidated and we look to reassess for the next setup.
BTC showing weakness triggered the majority of alts to breakdown. 0.1450 (high time frame equal low) was a key area for buyers to defend. If you zoom in on lower time frames you can see it had a volatile reaction as stop losses fueled a large wick down, followed by a large wick up as limit buys were being filled. Ultimately we had a clean breakdown turning 0.1450 into resistance. I would expect a leg up to retest the area at some point soon, however this trade is invalidated and we look to reassess for the next setup.