I thought this is just a simple multiple test of resistance that creates distribution cycle or perhaps a downtrend.
Because as far as I know, if a resistance or support has been tested multiple times, it gets stronger or is less likely to breakout/breakdown from that range, which is seen from the chart. A more effective approach I guess is to ascertain first the relative strength or weakness of asset vs the leading cryptocurrency, which in this case is bitcoin.
But hey, that's just me as we all have different insights on how we are going to trade the market.
Sometimes, but sometimes what is tested gets weaker, because it gets a piece of it destroyed. Imagine it like a wall, so lets say you want to go above 30k, but there is a wall at 30k, the more you hit that wall, the more possibility that it will break down eventually.
However, the most logical thing that happens most of the time is that when people hit that wall, they say there is a wall here and move somewhere else, just like how if you hit a wall, you do not keep trying to go through it in real life right? But there are rare moments when people are fed up with going down, so they just push through it, and with millions of people buying, that means millions of people punching the wall, soon the wall crumbles.
That's true, that's why usually there's manipulation or strong volume to the resistance or support zone to test the area if there's a strong buyers or sellers to stop the price from going through. If you see some long wicks passing through, it means the zone is really strong. At first it quite difficult to understand, but if you used to it and also know how to analyze the market using volume you will understand what really happens in the price.
