Round (psychological) levels are the prices of the assets that have an even numerical value. More zeros in numerical value mean more round price level
- Round price levels for BTC considered prices representing values in tens of thousands of dollars such as $30,000, $40,000, and so forth.
- For ETH – the values in thousands or hundreds of dollars such as $2,000 or $4,500, etc.
- For XRP – the value is represented in even single digits or each half a dollar $1 or $2, etc.
These levels are the battlefield for the most intense fighting of bulls vs bears. The conquering of these levels is often a signal of the continuation of the trend. However, there is a tiny issue with these levels.
DO NOT PLACE TAKE-PROFIT ORDERS AT ROUND LEVELS.
Market makers (whales) are well aware of the magical magnetic force behind large and round numbers that works like a charm for small and average investors. To maximize its own profit, the market maker sets a large reverse limit order just a few percent below the round price level. Then, the crowd totally convinced that this level will be reached provides a great deal of liquidity for the market maker’s limit orders. The price rolls back and will not revisit those levels for a long time. The crowd of small investors is left with unrealized profit while the market maker celebrates the great gains of the successful trade.
For that reason, I recommend setting take profit targets at 2-3% below round numbers, in the middle to a long term trading. Look at how many times the All-Time High levels fell short by a few percent from the round price point!
1. In 2017 BTC fell short of $20,000 by a mere 110$ (ATH peaked at $19,890).
2. In April of 2021, XRP has reached $1.97 missing the even level by 3 cents.
3. ADA (Cardano) Just like XRP missed $2.50 price by 3 cents by reaching All-Time High at $2.47 before falling back down hard from this level.
There are many more examples like those.
As I have stated before, Whales are prone to take profit for the long positions at the peak. With the large capital, whales are creating the peak, after a prolonged growth of the market by placing take-profit orders just a few percent below the even number. The long positions of those small players, who are waiting for the nice and round number provides enough liquidity for the execution of the take-profit positions for the whales.
Act like a whale, and not like an average small investor. Do not wait for Bitcoin to reach $100,000 to take profit. Set a take profit at $97,000-$99,000, level. Don’t wait for Ripple to hit $3, fix a profit at $2.90-$2.95 instead.
P.S. If the round price level was broken, it means that whales had no intentions to close their positions at those levels. It is a signal to reenter the position, that was closed to fix a profit at the price slightly below the nice and even number. As an example, at the end of the year, 2020 Bitcoin plowed thru All-Time High levels dated back to 2017, and continued its roaring vertical bull run to new heights! It is the second method of use of the round price levels.
Sincerely, Ed Khan