Trading crypto for 10 years, starting with 700,000 and making a profit of 58 million, using only 5 layers of trading, relying solely on this method, profits can reach 70%. I shared the essence of this with my disciple, who has mastered it in practice. Using this set of methods for short-term trading, his profits doubled in 3 months. Today, I specifically organized [6 steps to help you accurately find support and resistance levels*! ], sharing it with those destined to find it, so keep it well.
Everyone's initial intention in the crypto world is the same, and that's beyond doubt. If you are just here to kill time with a casual attitude, then this place is not suitable for you. We come to the crypto world to gain more profits and provide a better life for our families. If we say that technology in the crypto world is the premise for profit, then the strict rule that needs to be adhered to is the key to long-term profitability.
If you're looking to make cryptocurrency trading a second source of income, want to succeed in the crypto world, and are willing to invest time in learning and growth, then don't miss this article. Read it carefully; every point is essential knowledge in the crypto world. These 10 ironclad rules can help you in both bull and bear markets! I'll also share my ten years of experience in cryptocurrency trading later on!!
1. If you're new to the field, don't rush to make money; learn quickly. If you don't even understand the basic concepts of blockchain, such as exchange collapses and asset transfers, how can you possibly make money?
2. Learn from mistakes, practice diligently, and ask for advice less. In the crypto world, 100 people will have 101 different opinions. Speculators think investors are idiots, speculators think investors are parasites. A says a project is a great innovation, B thinks it's just a concept stock, C says they're both scammers… Who should you believe? Don't believe anyone. The crypto world is full of scammers, specifically targeting newcomers with hype and incentives. And 99% of people in the crypto world are just gullible韭菜 (a Chinese slang term for inexperienced investors who are easily taken advantage of). Who can you trust?
3. Network and points are important. In my opinion, 99% of group chats are about the same level as old men in a village park—focused on idle chatter and occasionally posting screenshots of profits. This kind of thing is actually not very meaningful. A quality network, at least, lets you see the facts of the crypto world. What do you think?
4. Investing is your own business. What does this mean? It means that ultimately, investing depends on yourself. Others' analyses and thoughts are only for reference. More independent research is needed to develop your own investment framework. Only with a framework can you have your own opinions. Don't worry about what others say; their level of expertise may not be as high as yours.
5. Contracts, short-term trading, arbitrage, ATMs, NFTs—which is best to play? The best one is the one that suits you. Currently, our group's strategy focuses on accumulating coins. If you have enough energy, we can guide you through ATM farming. Some people say contracts, short-term trading, and NFTs—to be honest, they're all just asking you to take over their losses.
6. How can you find a 100x coin? If you don't even understand the basic concepts, and don't know what the crypto world is all about, yet you're asking around, you'll never find a 100x coin; you'd be better off being executed. I want to emphasize that making money in the crypto world isn't easy; those things that seem easy don't actually make money. If someone tries to argue that someone bought a 100x coin and got approximately X times their initial investment, they're most likely a scammer.
7. Patience is the foundation of making money. You may need a long time to learn and be scammed countless times before you understand the cryptocurrency world. That's okay. Cherish every experience you have of being scammed; these are lessons you should learn on your investment journey.
8. Adhere to the basic rules of the cryptocurrency world. Accept the consequences, accept being scammed, and don't complain. The weak often blame others for exploiting them and complain about unfair rules. If you lack the ability to set rules, keep quiet.
9. Learn by doing. Some people say, "I've learned so many concepts and understand them, but it's still very abstract." That's not true. You should learn by doing, experiencing various projects. Of course, output is the best form of practice. You can also create content to attract friends and exchange ideas.
10. As long as you put your heart into it, you can always become a big shot. I know many people will disagree with me, thinking it's nonsense. How many people are still just being taken advantage of?
Remember, whether others are being exploited or not has absolutely nothing to do with you; what you need to focus on is improving yourself. Nothing is impossible for a willing heart. If you're going to argue again, refer to point 2.
In conclusion, it's about reviewing and summarizing. Don't make the same mistake twice; that's how you grow quickly.
I will explain today's topic in six parts:
1. The difference between general support/resistance levels and major support/resistance levels.
II: The Role of Key Support and Resistance Levels
Fifth: We'll guide you through hands-on practice in real trading, helping you identify key support and resistance levels.
6. How to deal with market reactions after major support and resistance levels: trend reversals, breakouts, and sideways consolidation.
1. The difference between general support and resistance levels and major support and resistance levels.
I dare say that 90% of people in the current trading market don't know how to identify support and resistance levels.
Of the remaining 10%, 80% found the wrong support and resistance levels.
When people talk about support levels, they usually imagine it as a floor.
When prices fall to a certain level, opposing forces begin to emerge.
The downward momentum in prices weakened, and they began to move in the opposite direction.
The same principle
A resistance level is a point where, after the price rises to a certain level, opposing forces emerge, weakening the upward momentum or even causing the price to reverse. You can think of a resistance level as a ceiling that prevents the market price from continuing to rise.
The above is our understanding of support and resistance levels:
Isn't this concept simple? If you think so too, congratulations, you're one of that 80%.
The two scenarios listed above will repeat countless times on the chart.
If we enter the market too easily based on the price failing to break a certain support or resistance level once or twice, we are very likely to suffer a painful lesson.
Because you don't know that this position is actually very meaningful to the market?
It's still some randomly generated noise, so at this point we need some more advanced techniques.
Those are the main support and resistance levels, which help us filter...
To avoid confusion
Next, I will explain the main support and resistance levels that this article will clarify.
Abbreviated as "key level" in English, it is called "key level" in English.
Key levels are truly sensitive areas in the market; the market has shown its stance on them and reacted significantly to them, and they have also been rejected by prices many times.
It may have been an enemy of the market yesterday, but today it has become a friend of the market.
Key positions are like magnets; there's an invisible attraction that keeps people trying to get closer to them.
If we can accurately identify it when the market approaches this level again...
We can then make a reasonable prediction about the future, that is, prices will react to some extent again.
This is our chance to enter the market and make money.
Second: The role of supporting resistance levels:
So, what are the practical benefits of learning to identify accurate key levels? How does it actually help us in trading?
We all know that there are two things that the vast majority of traders do wrong, and these are the biggest and most fatal mistakes.
The first is random entry into the market without a plan.
The second is chasing highs and selling lows.
I will explain each of the above two points with a story.
The first type: entering the market at a random, unplanned price.
Imagine you are a sniper. Upon receiving a mission, you would need to develop a comprehensive plan.
For example, choosing a sniping position and understanding the target's habits and behavior.
What equipment do you need?
Your entrance route
Your escape route
You need to observe your surroundings.
The disguises you will use
And you need to patiently wait for the target to enter your firing range.
Trading is the same; every successful trader...
Before each trade, there is a comprehensive plan, rather than entering the market aimlessly and randomly.
Key levels are excellent entry points for setting up and blocking trades, because the market often reacts significantly at these levels, offering your best chance to capture the next major market trend. Your task is to formulate your trading plan here.
Formulate a series of ifs:
If the price really does return to this level...
If a reversal candlestick pattern appears here...
If a double top pattern forms in the price here...
If there's enough profit potential between this point and the next key level...
If the price goes there
I'm going to take profits!
If the price is wrong
If you get here
Then I need to cut my losses.
You should make the above plan before each transaction.
Work well with key positions
This top-notch strategic deployment location
Your chances of success will naturally be much greater!
The second
It means chasing highs and selling lows.
Have you ever played the game "Monkey Steals the Ball"? The rules are very simple.
It's basically one person playing the role of the monkey, while the others pass the ball around the monkey.
At this time
The monkey has to keep running around.
Go steal the ball
Those who have played this game and been the monkey should know very well.
Every time you run to the ball, it gets passed to the other side, and you have to run all over again.
In the trading market, if you aimlessly chase after the price of a coin...
You're actually playing the role of the monkey, every time you see the price has gone up...
You feel that this is an opportunity you can't miss and you have to rush in immediately.
But by the time you enter the game, the ball has already been passed to someone else, which is after you've made your stop-loss move.
Then they continue walking in the opposite direction; I believe many people have encountered this situation.
You might feel very discouraged, as if you'll never be able to win this game.
The only solution to get out of this predicament is to let go of your agitated emotions.
And the plan to chase the ball, combined with the sniper example mentioned earlier, to formulate a trading plan.
The shift is from chasing the market to waiting for it to fall into your trap, seizing opportunities before acting. This naturally increases your chances of winning. Therefore, another significance of key levels is that we no longer need to chase prices, but rather deploy your strategy, wait for prices to return, and find a high-probability entry point.
When you repeatedly do this, combined with proper risk management and the right trading mindset...
I believe you will be more successful than 90% of people in the market.
Three: Five tips for identifying key support and resistance levels
So how can we accurately identify key levels on a candlestick chart?
Remember these 5 conditions
1. The more times you have contact, the better.
2. Had a strong reaction
3. It is very clear and easy to see at a glance.
4. Has been rejected multiple times
5. Simultaneously passing through both support and resistance levels
All five conditions above do not need to be met for a position to be considered a key position.
However, the more conditions are met, the more powerful and effective that position is.
Next, I will break down the above 5 points step by step:
The more contact the better
There's a simple way to determine if a price level is a key level: the number of times it's touched by the market.
In our daily lives, if you find that a situation keeps repeating itself, you might think it's just a coincidence the first or second time, but when it happens a third or fourth time...
Do you find this matter highly suspicious? It seems as if it was premeditated and had a specific purpose or reason for happening.
At the same location, at different times, the price failed to surpass this level several times.
If a stock has encountered resistance or support at this level, we might wonder if this level holds any special significance for the market.
Is this position a crucial one? Is it the high or low point for this year?
In summary: A price level reacting to a price line once or twice might just be a coincidence, but when this happens more frequently, the probability of it being a key level increases significantly.
There was a strong reaction
We know that history tends to repeat itself. If prices don't react strongly after reaching a certain level, how can we reasonably expect them to react significantly again at the same level in the future?
The market, like humans, has a memory, but we usually only remember the things that left a deep impression.
Everything is based on one concept: reasonable expectation. When the market returns to a level where it previously surged or plummeted, we have a reasonable suspicion that prices might repeat history and react significantly at the same point. That significant reaction represents our profit potential.
Within this location, numerous orders placed by investment institutions had already been strategically placed.
When the price returns to this key level, there will be a chance to trigger their orders.
If we, as retail investors, temporarily align our views with those of institutional investors at this point, the price will quickly move in the direction we desire.
Move away from your stop-loss and towards your profit target.
As the saying goes, "Follow the big players, and you'll have a bull market every day."
This is one of the key principles of market manipulation I've learned over my years of experience in the financial industry.
It's very clear and easy to see at a glance.
A good key position has one condition: it must be very clear, very specific, and easily visible at a glance.
Imagine one day you open a chart and find a position that seems like a key level, but also doesn't?
If you see the price trying to find resistance or support at a certain point, and the price seems to react, but not significantly, then...
I urge you to give up this position immediately! Right now! Immediately!
Even if you manage to find a reason to consider this a key position, your confidence in that position is already being subtly affected. Why?
Because when a trading signal actually appears, you will definitely hesitate, which will greatly affect your trading decision.
Even if you actually enter the market, you'll get very scared if the price line moves even slightly in the opposite direction.
Even if you have a very strong WeChat account that prompted you to make this transaction, you might still doubt your position.
And by giving up that crucial position too early, you were forced to leave the game prematurely.
Then you'll abandon your original trading plan, and the trade will end in failure. You'll fail to adhere to the fundamental principle of consistency. The market has no shortage of trading opportunities; there are over 200 currency pairs available for trading in the cryptocurrency market, along with various forex, futures, and securities products.
I'm never afraid of you missing an entry opportunity; what I fear most is entering the market without following your established trading plan and lacking confidence.
Rejected multiple times
When pursuing a girl, the most painful thing isn't being rejected by the one you like, but being rejected relentlessly by the one you like.
Finding key levels follows the same principle. We need to find the pain points in the market; we would like to see a certain position that has been repeatedly identified at different times.
Alternatively, by repeatedly experiencing a rejection, each repetition of this response increases our chances of entering the market.
Simply put, you'll see candlestick patterns appear around this position, with one or several long upper or lower shadows, and the price tends to move in the opposite direction each time it's rejected.
This means that prices have repeatedly expressed their intentions to the market, rising or falling multiple times, but each time the market rejected them, immediately pulling them back by opposing forces.
This situation indicates that a strong force is guarding this position.
Whenever this happens, especially when the daily price successfully breaks through this area, we consider it a strong and effective key level.
Both support and resistance levels have been tested.
In the world of trading, there are no permanent friends or permanent enemies.
One scenario we would like to see is that yesterday's support level becomes today's resistance level.
Or perhaps yesterday's resistance level becomes today's support level; whenever the price breaks through the previous resistance level...
Often, the price will return to the same position and bounce back again.
If the price is rejected at this point, it means that yesterday's resistance has turned into today's support. This situation also indicates that this position has considerable influence and is respected by both legitimate and illegitimate parties.
In other words, both sides have held this position at some point, and every time we see a certain position...
If we've tested both support and resistance levels, we can generally determine it's a key level, and we're fairly certain we're on the right track.
After explaining the conditions of the five key bits, I will now explain five aspects related to applications.
Common mistakes many cryptocurrency enthusiasts make, along with some useful tips.
4. Five common mistakes in identifying key support and resistance levels and how to avoid them.
Five common mistakes in finding key positions, and how to avoid them.
1. Too many lines drawn
2. Reckless entry
3. It is a region, not a line.
4. The scope is too large.
5. Longer timeframe charts are more accurate.
Too many lines
When it comes to finding key levels, the first common mistake is drawing a line through all the so-called support or resistance levels seen on the chart.
The more lines you draw, the more trading opportunities you have, and the more money you will make.
Because many of the lines you draw are just market noise.
Based on the five conditions mentioned earlier, many of these are not considered qualified key positions.
If we arrange the charts like this, it will only confuse us and affect our trading decisions.
Everyone should know one principle:
The key to analyzing charts is to keep them simple and clear, ensuring we can clearly see price action. Our primary focus is on observing price reactions.
If too many things obscure the candlestick chart, causing us to be distracted or hesitant, then we are definitely putting the cart before the horse.
Therefore, we only need to focus on the most obvious, important, and closest major support and resistance levels.
Reckless entry
The second point is reckless entry. Let's take a look at a real-world example. When we find a key level (as shown in the figure)...
We saw that the price reacted strongly downwards when it touched this level last time, and now it's back here. Don't assume the price will fall again and immediately enter a short position.
Doing so will likely result in a painful lesson.
As we just mentioned, there are no permanent enemies, and even fewer permanent friends. Yesterday's resistance level could very well become today's support level. Key levels are actually a market equilibrium point.
Both sides will want to make a breakthrough or hold their ground here, so their forces usually clash at this location.
What we need to do is wait for the market battle to unfold and observe how prices react to this level.
Should one decide whether to enter the fray based on the traces left by the two sides during their exchange?
Why enter?
When should we enter?
When should we leave?
Wait a minute - a series of trading plans
Simply put, the best approach is to wait for a trading signal as confirmation before entering the market.
This signal can be a technical indicator, a chart pattern, a candlestick pattern, or even fundamental analysis.
There are over a thousand different combinations that can be used as trading signals.
Due to space limitations
It's impossible for me to cover everything in this one article.
Therefore, this matter will not be explained in detail here today.
I will only briefly discuss two or three trading signals in the last part of this article.
In the future, I will write more detailed articles on different entry signals.
It's a region, not a line.
We'll continue by explaining the third incorrect usage: the true key point should be an area, not a line.
Although the market does repeat itself, the process is never 100% identical each time.
Market cycles are like the circles drawn in the diagram above. Each circle will have some differences, and it's rare to draw identical circles. This isn't because I intentionally didn't draw them that way.
Rather, the market is fraught with uncertainty. Although the results may be similar, there is an extremely low probability that the process will completely replicate the previous one.
Taking this as an example, the price rebounded again after reaching this level for the second time. When it returned to this level for the third time...
Based on your analysis, you decided to enter the market with a stop-loss order placed at the previous retracement level. However, today the price decided to drop further, hitting your stop-loss order directly.
If you draw this key level as a zone, your stop-loss will be set here, and your trade will be successful, bringing you substantial profits.
The difference between a successful and a failed trade is just a tiny area.
Drawing key levels as a region can help us avoid many losing trades.
At the same time, it can drive the price down to our profit target, which is the direction we want, greatly reducing the chance of an unexpected exit.
I believe that those who trade contracts will deeply resonate with this: the overall market trend hasn't changed at all, and it's still developing according to their expectations.
Because of that wretched needle, my account was wiped out.
The scope is too large
Sometimes we find that the drawn key area is very large.
This situation is more likely to occur over large intervals.
As shown in the chart, a trading signal has appeared within the candlestick chart. Normally, if a signal appears at this position, there is sufficient reason to enter a trade.
However, because the area we are drawing here is too large, it makes us hesitate.
A field that's too large can leave us feeling lost. Even with clear signals, unnecessary worries can arise, causing us to hesitate and miss opportunities.
When this situation arises, we can connect as many points on the physical line as possible to narrow down the area to a reasonable range, while ensuring at least three points of contact. This will make the entire situation much clearer.
Larger timeframe charts are more accurate
Larger timeframe charts are more accurate; you've probably heard that the larger the timeframe, the more accurate the chart.
The logic is quite clear: the more time you spend developing, planning, and preparing for something, the higher its success rate will be.
In a very short time
Impromptu events tend to have a much higher chance of success. When we look for key levels, we always start with a large timeline.
Here, I'd like to share a chart-reading technique I've developed over many years, which was taught to me by a trader from a well-known institution.
From weekly charts to daily charts, then to 4-hour charts, and then 1-hour charts, it's a downward progression, layer by layer.
Analyzing any currency pair always starts with the larger timeframe chart to formulate a trading plan for the following week. Once you understand the major market trends...
Your chances of being on the right side will naturally be greater.
If you have limited trading experience, I suggest you start with larger timeframes, such as daily or even weekly charts.
First, build your confidence in trading, then gradually try it on smaller timeframes.
5. We'll guide you through hands-on practice in real trading, helping you identify key support and resistance levels.
Now I've finished explaining the five conditions for defining key positions, as well as five common mistakes and tips in application. You might feel that what I just said was somewhat subjective, and it's difficult to define them with clear, quantifiable conditions.
For example:
What constitutes a strong reaction? How many rejections are needed to be considered "multiple"? And how many rejections are needed to be considered effective?
If you also have this question, congratulations!
Your comprehension is amazing!
You have likely already begun to absorb and digest this concept.
This is why I categorize this course as Advanced Technical Analysis+.
Indeed, the concept of a key position is very subjective.
Technical analysis, including all price action, involves showing the same chart to different people.
The results may vary, so the only way is to perform backtesting yourself.
Practice more and observe charts more.
Don't just think about it, take action! Next, I'll show you a few examples so you can put what you've just learned into practice.
OK!
Before looking at chart examples, I first need to teach you how to draw a key position.
Step 1: We draw a line to indicate the area where the K-line touches the most.
This line will follow one principle: the body is more important than the lead wire.
Why?
Because we need to focus on the price at the end of the candlestick chart. That is, the result. The "leading line" signifies what happened, not the result.
Step 2: Draw multiple lines above and below the previous line; the goal of these two lines is to touch the candlestick as many times as possible, whether it's the body or a bow/curve.
Step 3: Delete the middle line
This will give you a preliminary key region. If this region is too large...
You can adjust it according to the secret I just mentioned, based on the principle of connecting to the point of maximum contact.
Remember this principle: the solid body is more important than the bowstring! If there is a conflict between the solid body and the bowstring, we will choose to sacrifice the bowstring!
Next, we'll officially begin looking at some chart examples.
In the first candlestick chart, can you guess where the key level is? And how many conditions does it meet simultaneously?
That's right! This is it!
First, we draw a line, trying to make it touch as many entities as possible.
Then draw several lines above and below it to form a first draft.
Finally, let's make a slight adjustment; this area is the key position.
Do you see that this position is a bit out of bounds? For us...
It's actually acceptable, because markets are usually not perfect, and the probability of things going like what's depicted in some books is very small.
As long as the flaw isn't too significant, it won't affect his eligibility for a key position.
This position satisfies three conditions.
First: It had at least three contacts.
Secondly, we have all seen that prices have reacted strongly in the past.
Thirdly, it has acted as both a support level and a resistance level.
Okay, let's strike while the iron is hot and look at the second candlestick chart!
Let's try to find the key position together.
The same drawing method
Step 1: Draw a line that connects to as many entities as possible.
Step 2: Draw another line above and below it; this will give us a preliminary key position.
Step 3: Let's make a slight adjustment. This key position now meets four conditions.
First, it had more than three contacts; second, this location is very obvious – you can see it at a glance.
The third one had elicited a strong reaction more than once.
Fourth, we can see from candlestick patterns that the price has been rejected multiple times.
Okay, enough is enough! Let's do one last set of exercises. This picture looks a bit difficult.
First, we draw a line that touches all the entities, and then draw a line above and below it, and another line below it.
Okay, here's the problem! What if we encounter another situation where someone crosses the boundary?
Here I will define it as a false breakout event. I will explain the concept of a false breakout later. Generally, my approach is to ignore this false breakout.
Break it, because I don't want the talking area to be too large.
I've emphasized many times that key positions are very subjective; every chart and every person's perspective may be different.
What you need to do is believe in yourself. This article I'm writing today will guide you into the world of advanced technical analysis.
However, this matter cannot be fully understood through a single article.
To achieve a thorough understanding, you must spend the time to figure it out yourself.
Observe and try – this applies not only to key levels, but throughout the entire world of trading.
There are countless ways to win money, as long as you've tested them yourself, verified them, or firmly believe they're feasible.
Then it will work; believe in yourself.
Success comes when you do something to the extreme. Don't let a few words from others sway you!
Okay, let's continue. This is a very strong key position.
It satisfied all four conditions at once:
Its contact occurred more than 3 times in a row.
He has also worked on support and resistance levels.
There was a strong reaction before.
It has also been rejected many times.
Six: How to deal with market reactions after key levels: trend reversals, breakouts, and sideways consolidation.
First: Transactions are time-sensitive.
The cryptocurrency market is constantly changing. Even if I've given you the exact entry point, things can still change if the price action doesn't go as I predicted.
I need to tell you to close the position immediately, from writing to publishing, to reviewing, and then you pick up your phone.
There are too many uncertainties that could delay the opportunity.
Second: Challenging human nature is difficult.
Humans are greedy, including myself.
Many people could clearly make money while trading, but they complain that they're not making enough.
You earn 5%, then wait for 10%; you reach 10%, then wait for 50%; and once you've reached 50%, you want to double it to 100%.
As a result, after the waterfall cascaded down, the price dropped to -30%.
Finally, seeing that things weren't going well, I decided to close the position and exit with a smaller loss. I believe this kind of thing happens every day.
Therefore, I advised you to set a profit target and take profits quickly, practicing planned trading. Very few people can actually do that.
If you make money, that's fine; you might even appreciate my kindness. But if you lose money once, then I'll have to bear the title of a master conman.
The truth is, out of 100 trades, I let you profit 99 times, but only this one time—that's human nature.
Third: I don't know you
My sharing is purely out of interest. I have already achieved financial freedom through the stock market, and I don't need to prove anything to anyone.
I don't need to put pressure on myself by helping others make money. What does it matter to me whether you make money or not?
What does it matter to me how much money I make?
Fourth: Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.
This is also one of the most important reasons why I write and share.
Mr. Lu Xun abandoned medicine for literature
Claiming that studying medicine cannot save China
Because I want to improve my health
First, improve mental health
Even now, people from all over the world continue to provide aid to Africa, donating money, supplies, and personnel.
The amount increased year by year, but it was discovered that the more they donated, the poorer they became.
I believe you, the reader, are also a smart enough individual, because those who understand the cryptocurrency world and dare to take the plunge must be members of this community.
The most outstanding elites in the association
So what I hope to teach you is the technology, the fundamentals, so that you can integrate them using your own independent thinking ability.
Develop your own trading strategy and stop being at the mercy of others.
In summary
Next, I will talk about
Its value will definitely be greater than a trading strategy.
Typically, after prices pass a key level...
You will mainly see three types of results:
1. Trend reversal
2. Breakthrough
3. and sideways consolidation
We'll start with trend reversals.
Generally speaking, there are three signs that indicate a price reversal, potentially leading to a significant trend change.
First: The price was rejected.
The most typical example is candlestick patterns, such as the shooting star or hammer candlestick. As mentioned earlier, the meaning of these patterns is that the price has previously...
Try upwards or downwards
However, it is immediately pulled back by the opposite force, which is a very classic, simple and effective reversal candlestick pattern.
Besides patterns like the Shooting Star, we can also use a simpler method to help us identify them: the RSI indicator.
Don't assume that things like Shooting Stars and RSI indicators are useless.
Any candlestick pattern, chart pattern, or technical indicator will have its accuracy greatly improved if it occurs at a key level!
Let's look at some examples:
Here we see that at this key level, the price attempted to test the upward direction and break through the resistance level. However, a counter-trend force immediately appeared, forming a shooting star pattern. This counter-trend force even intensified, becoming stronger than the upward breakout force, ultimately reversing the entire trend.
Let's look at another example in the opposite direction. We see that when the price enters a key level, upward momentum begins to emerge.
We see a long lower shadow below the body of the candlestick, forming an inverted hammer pattern. This long shadow represents the downward center of gravity, indicating that the downward force has lost control.
Until the candlestick closes, the price cannot continue downwards. When the balance of power between the two sides is lost, the price naturally moves in the direction of control. Of course, the RSI indicator can also serve as an entry signal. Let's see how this actually happens.
When the price reaches a key level and the RSI indicator rises above 70, it means the market is in an overbought state, which is a sell signal.
When the RSI flashes a signal at a key level, it indicates that the current trend is about to change.
Or at least a downward retracement is expected, which naturally results in a much higher success rate for the signal compared to a random, insignificant entry point.
Therefore, you must remember that no technical indicator or candlestick pattern should be used in isolation. Many people have lost a lot of money because of this.
All trading signals must find a consensus point. This can be achieved through different patterns, technical indicators combined with chart patterns, chart patterns combined with candlestick patterns, support and resistance levels, trend lines, or fundamental analysis. This approach will increase your trading win rate.
Financial trading is a game of probability. Whether you're trading options, US stocks, or cryptocurrencies, you need to understand this to have a chance of survival. This is absolutely the watershed between successful and unsuccessful traders.
Having finished the first one, let's move on to the next two.
The next two concepts are more complex because they aren't immediately apparent. Instead, they involve trading by observing price action, as the momentum of the candlestick chart itself can provide clues, allowing us to gauge the likelihood of a trend reversal.
The first thing to do is observe how the price approaches the candlestick pattern.
Let's look at this example. We see that when the candlestick is close to the resistance level, the - is only smaller than the -.
This signifies that the upward momentum is beginning to weaken, and also hints at something else entirely.
There is a consensus among buyers:
Okay! Listen up, guys! We've reached a point where we should stop here. It's not worth pushing any further. Let's just make a show of it!
When the market shows signs of a reversal, prices immediately begin to fall.
Conversely, when approaching a major support level, the candlesticks will inevitably decrease in size, indicating that the downward pressure is gradually weakening before a rebound occurs.
Second: The number of callbacks is increasing and becoming more frequent.
Let's look at this example. When the price goes up, things initially go very smoothly.
As the price approaches a key level, pullbacks become more frequent and more frequent, and we see the price starting to lack direction, fluctuating within a narrow range.
What does this imply? It means that opposing forces are beginning to emerge, and they are forming a fierce struggle.
Although we see that the buyers still have control for the time being, it feels like they are on the verge of collapse, and even when they are close to a key level, which is the buyers' profit-taking point, the price immediately reverses.
So, that concludes today's technical sharing. I believe those who have read this far have gained a great deal, as if they've attended a valuable university course.
I wrote an article about the mindset for cryptocurrency trading, hoping it can serve as a guiding light for you on your cryptocurrency trading journey in 2024, so you never lose your way!
Let's first summarize the main reasons for losing money. Only by understanding why you're losing money can you figure out where you can make money.
1. Without stop-loss orders, short-term trades become medium-term trades, and medium-term trades become long-term trades.
As someone with many years of experience in the investment industry, I'm often asked, "What's the most common mistake investors make in the investment market?" My answer is failing to cut losses promptly. Because of leverage, both long and short positions in investing amplify profits and losses. The consequences of not cutting losses in time are often extremely serious. The same applies to the cryptocurrency market. We all know that in the cryptocurrency market, our most valuable asset...
Wealth is our investment capital, and capital is like ammunition on the battlefield; without ammunition, defeat is inevitable. We must always be vigilant in protecting our capital and preventing losses from escalating indefinitely. Many people hope, pray, and dream of finding a perfect trading method that can guarantee profits without stop-loss orders. In short, such a perfect way to make money is impossible in any field. Successful trading, like a successful life, is not achieved by avoiding losses, but by effectively controlling them.
Switching timeframes is a common mistake made by novice traders in the cryptocurrency market. This so-called timeframe switching is essentially a disguised form of refusing to cut losses or admit mistakes. It happens like this: A trader buys a contract with the intention of making a good short-term profit, but the market doesn't move as expected. Instead of selling within the short-term timeframe, this investor decides to hold the contract and switch to a medium- or long-term investment. This is merely an excuse to avoid cutting losses. This method of switching timeframes will inevitably lead to disaster, and cutting losses is the only way to avoid disaster.
2. Neglecting money management and failing to control position size.
Investing our hard-earned money in cryptocurrency trading is essentially no different from investing in the convenience store near your home. If the owner of that convenience store approached you to invest in his shop, how would you consider it? How much would you invest? Would you make a decision on a whim like you do with cryptocurrency trading? So-called money management is precisely about solving the questions of whether to invest and how much to invest.
The advice for beginners is to divide their funds into six parts, investing only one part at a time. As their experience grows and their investment accuracy improves, they can gradually increase their position size, but at no time should their holding in any single asset exceed 50% of their total capital. Otherwise, if they make a mistake, recovering will be very difficult. For example, if you have 100,000 yuan and lose 50%, you're left with 50,000 yuan. To earn back 100,000 yuan, you need to earn 100%. Anyone with basic math skills knows that earning 100% takes much longer than earning 50%.
A survey conducted in the US fund management industry revealed that the most important factor for long-term fund success is not the timing or price of entry, but rather the amount of money the fund invests. This is what the investment world refers to as "money management." In cryptocurrency trading, neglecting proper money management will absolutely prevent you from reaping the rewards of success.
Personal experience summary:
1. Plan your cryptocurrency trading funds wisely, so you have enough capital on hand and peace of mind!
2. Do not trade based on emotions, and do not let profit cloud your judgment or lead you to place orders blindly.
3. Develop a sound trading plan and follow market trends.
Use larger positions for trend trading and smaller positions for swing trading, carefully managing the proportions. When trading against the trend, use small positions and set stop-loss orders; when trading with the trend, add to your positions and hold firmly. There's no such thing as unprofitable cryptocurrency trading, only unprofitable trading strategies. Cryptocurrency trading is a test of the right mindset! Wishing all cryptocurrency traders find their own trading methods and achieve steady profits. #BTC
Follow Zihao and you will definitely gain something. Helping others is like helping yourself. I hope that no matter how the market changes, we can walk together and look back on the crypto world with a smile ten years from now.
