In two years, I turned less than 100,000 into over 3 million. Let me share some pure insights on how to earn more wealth in the crypto space.
Thinking back to the year when I struggled for half a year over how many times leverage to use, I had no reference path to learn from. I could only stare at the K-line, replaying it over and over again, day and night. After much effort, I have gained real knowledge, mastered skills, and earned more wealth. This is my motivation to move forward, along with the likes, collections, follows, and comments from my fans and family, which are also the driving force behind my continuous updates and creations!
Crypto Survival Guide: Revealing super practical trading skills (pure dry goods).
In the crypto space, trading strategies are your 'secret weapon'. The following mnemonic phrases are the crystallization of practical experience; make sure to save them!
- Entry Section: Test the waters in the crypto space, prepare to lead; enter steadily, refuse to rush in.
- Sideways Section: Low-level sideways creates new lows; it's a good time to buy heavily; high-level sideways surges; decisively sell without hesitation.
- Volatility Section: Sell after a surge, enter quickly after a plunge; observe sideways and reduce trading. Sideways means holding tight, and a rise may come at any moment; during a rapid surge, beware of a crash and be ready to secure profits; a slow decline is a good time to gradually add positions.
- Timing Section: Don't sell at a high; don't buy at a plunge; trade sideways, don't trade. Buy on bearish candles, sell on bullish candles; only by doing the opposite can you stand out. Buy during major morning dips, sell during major morning surges; don't chase highs in the afternoon surge, buy after afternoon drops; don't panic sell during morning drops; if flat, do not trade; average down to seek break-even, excessive greed is inadvisable.
- Risk Awareness Section: Calm waters can rise high waves; there may be big surges ahead; after a big rise, there must be a pullback; K-lines show a triangle over several days. In an uptrend, look for support; in a downtrend, look for resistance. Full warehouse operations are a big taboo; acting recklessly is not feasible; knowing when to stop in the face of uncertainty, grasping the timing to enter and exit. Trading crypto is essentially trading mindset; greed and fear are great enemies; be cautious with chasing highs and cutting losses; a calm mind is key.
In addition to the mnemonic, I have also organized several super practical trading methods that can benefit both beginners and experienced players.
Oscillation trading method: Most market conditions are in a oscillating pattern; using high sell and low buy within a box is the foundation for stable profits. Utilizing the BOLL indicator and box theory, along with technical indicators and patterns to find resistance and support. Follow short-term buying and selling principles, avoiding greed.
Breakout trading method: After a long period of consolidation, the market will choose a direction. Entering after a breakout can yield quick profits. However, it requires precise judgment of the breakout and maintaining a steady mindset, avoiding greed and fear.
Unilateral trend trading method: After the market breaks out of a range, it will form a unilateral trend. Trading with the trend is key to profit. Enter on pullbacks or rebounds, referencing K-lines, moving averages, BOLL, trend lines, etc., and proficiency is crucial.
Resistance and support trading method: When the market encounters key resistance or support levels, it often gets blocked or supported; entering at this time is a common strategy. Use trend lines, moving averages, Bollinger Bands, parabolic indicators, etc., to accurately determine resistance and support levels.
Retracement bounce trading method: After significant rises or falls, a brief pullback or rebound will occur; seize the opportunity for easy profit. The main basis is the K-line pattern; good market sense can help you accurately grasp highs and lows.
Time-frame trading method: Morning and afternoon sessions have small fluctuations, suitable for conservative investors; although the time to profit may be long, the market is easier to grasp; evening and late-night sessions have large fluctuations, suitable for aggressive investors; they can profit quickly but with higher difficulty, requiring strict technical and judgment capabilities.
Do you yearn to learn how to perceive market trend changes in advance? Unfortunately, such methods do not exist; no trading system or method can achieve this goal, nor is there a so-called 'best trend reversal indicator'. However, you can learn how to interpret price movements and identify potential areas where the market may reverse.
In this guide, you will learn the following:
(1) How to identify trend reversals through analyzing market price behavior.
(2) How to determine where the market may start to reverse (with high accuracy).
(3) How to identify high-probability trend reversals.
2. How to identify trend reversals - identify weaknesses in trend trends.
(1) Define trend trends.
Trend trends are the 'stronger' parts of the trend, trading in the same direction as the trend (therefore it is called a trend trend). In a healthy uptrend, trend trends usually show stronger bullish signals than bearish candles, with bullish candles being relatively more numerous and their closing prices close to the day's highs, as shown below.
When the size of bullish candles decreases, this usually indicates that buying pressure is weakening, or that selling pressure is simultaneously present, as shown below.
However, this does not mean that the market will necessarily crash. However, this is a clear sign that buyer power is weakening, and a temporary adjustment may be needed before the market may rise again.
(2) Determine the strength of the retracement trend.
Retracement trends are opposite to trend trends; they are the 'weaker' part of the trend and move in the opposite direction (hence the term retracement trend). In a healthy uptrend, retracement trends are usually more bearish than bullish candles, with bearish candles being relatively fewer and typically closing at the center or below the trading range, as shown below.
When the size of bearish candles increases, this usually indicates that selling pressure is intensifying, as buyers are unwilling to purchase at higher prices, as shown below.
Similarly, this does not mean that the market will definitely reverse from here. However, it is indeed another sign of gradually weakening buyer power.
(3) How to identify trend reversals - break support/resistance areas.
As the trend develops, it will enter a distribution phase where the power between buyers and sellers tends to balance (the market appears to have entered a range state). In this phase, the support area becomes particularly crucial as it represents the last line of defense that buyers can hold. If this support area is broken, the situation will become very unfavorable for bulls, as shown below.
Based on experience, if a support area is tested multiple times in a short period, the probability of its sustainability will decrease.
(4) Breakthrough of long-term trend lines.
In some cases, the market will show respect for key trend lines; if this trend line is broken, it may indicate that buyer power is weakening, as shown below.
It is evident that what you have learned before is 'analysis' techniques that help you analyze when market trends may reverse. However, this is not sufficient, as market structures are always changing; sometimes the market respects support or resistance levels, while at other times it may be the trend lines, etc. Therefore, in the following content, you will learn 'prediction' techniques to help you identify high-probability situations where the market may reverse.
3. Areas where the market may reverse - higher time frame structures.
Not surprisingly, support or resistance levels identified in longer time frames have a greater influence compared to similar levels identified in shorter time frames. This means that support or resistance levels identified on a weekly basis are more critical than those identified on an hourly basis. Therefore, if a sudden reversal is observed in the market, it is likely that the market has entered a higher time frame structure (such as a support or resistance level) and achieved a reversal within this structure, as illustrated below.
This method is useful for two main reasons: first, you can use the structure of higher time frames to identify high-probability market reversal areas. Second, you can avoid trading directly within higher time frame structures, thereby avoiding potential poor trading setups. Next, let's continue to learn the subsequent content.
(1) Excessively expanding market.
First, let's clarify the concepts of mean reversion and excessively expanding markets.
Mean reversion: This means that market prices tend to revert to their average levels, which can be measured by moving averages, Bollinger Bands, or other trend reversal indicators.
Market excessive expansion: This means that market prices have deviated from their average levels, exhibiting a state of 'excessive expansion'.
The truth is that markets rarely fluctuate along a straight line; when the market is in an 'over-stretched' state, it typically experiences a decline before continuing to rise (which is why, in an uptrend, you will see higher highs and lower lows). At this point, you may wonder, 'What does an 'excessive expansion' market look like?' (Hint: You do not need to rely on any reversal indicators to identify this situation) Below is a concrete example.
Therefore, when you observe that the market exhibits signs of excessive expansion, a wise choice is to wait for the market price to pull back to a reasonable level before considering establishing a position. Alternatively, if you are a mean reversion strategy trader, you can take advantage of this phenomenon for counter-trend trading, that is, establishing positions when the market price approaches its mean.
(2) Parabolic move.
Parabolic moves typically occur in the later stages of a long-term upward trend, where market prices suddenly exhibit a ballistic vertical upward trend, resembling a rocket launch. You will also notice that the range of candlesticks in the parabolic move is much larger than that of early candlesticks. When this occurs, it usually signifies that the upward trend is about to end, as 'blind' funds flood into the market while 'smart' funds exit their trades, often accompanied by significant increases in volatility. Therefore, if you notice that a market has experienced a prolonged upward trend and suddenly shows parabolic rises, this could be a strong signal indicating that the market top is approaching, as illustrated below.
I realize that identifying parabolic moves can have a certain subjectivity, thus it can be viewed as one of many market reversal indicators worth close attention. You might consider using the Average True Range (ATR) indicator and analyzing volatility data from recent years; if the ATR value is at a high over the years, this may be a potential warning signal. Additionally, the Keltner Channel can also serve as one of the trend reversal indicators to 'predict' market turning points.
4. How to identify high-probability trend reversals.
You have learned multiple techniques to identify trend reversals and predict market turning points. However, it is important to note that you should not use any single technique in isolation, as this often leads to low-probability trend reversals. Conversely, by combining multiple techniques, you can increase the likelihood of discovering high-probability trend reversals, as follows:
(1) Sugar Weekly.
The key support level for Sugar is formed by the long-term trend line and support area, which were eventually broken, leading to the formation of a typical head and shoulders top pattern.
(2) Corn Weekly.
Corn prices have strongly re-tested previous highs. However, with increasing selling pressure (represented by large bearish candles) and decreasing buying pressure (represented by small bullish candles), the market shows danger signals. Additionally, you will notice a common reversal pattern where a small head and shoulders shape indicates that buyers are unable to break through previous highs. Importantly, there are no hard and fast rules or fixed regulations to determine which combination is the best; it all depends on interpreting market price movements to find high-probability market turning points. No matter how confident you are in the market, you still need a clear plan for entering, exiting, and managing your trades, while adopting appropriate risk management measures.
5. Frequently Asked Questions.
(1) How do I confirm if a parabolic move will reverse or continue to rise?
Cannot determine, but what I focus on is the depth of the pullback. If the pullback of small range candles is shallow, the market is likely to rebound again. However, if the pullback is very steep and large retracement candles appear, the parabolic move is very likely to have ended, and the market may enter a range or completely reverse.
(2) Are there any common chart patterns to trade trend reversals?
Yes, if you want to discover more trend reversal patterns to trade trend reversals, please check the following: (Inverse Head and Shoulders Trading Strategy Guide), (Head and Shoulders Trading Strategy Guide), (Double Bottom Trading Strategy Guide), (Triple Top Chart Pattern Complete Guide).
6. Conclusion.
It is not possible to provide a method to achieve 100% accuracy in identifying market trend reversals; similarly, there is no so-called 'best trend reversal indicator'. Instead, what you can do is read price movements and identify potential areas where the market may reverse. Here are some references:
(1) Identify weaknesses in trend trends.
(2) Determine the strength of the retracement trend.
(3) Breakthrough of key support or resistance levels.
(4) Breakthrough of long-term trend lines.
(5) Price is entering a higher time frame structure.
(6) Price is too high.
(7) Price is parabolic.
When multiple factors converge, the likelihood of a trend reversal increases.
If you are also a tech enthusiast and want detailed strategy teaching, follow Gong Zhonghao (the crypto general instructor), who specializes in medium to short-term contracts and medium to long-term spot layouts.