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Teach You to Master Wave Theory

Just entering the cryptocurrency world, do you find candlestick charts like a mystic script? Today, I will introduce you to a super practical wave theory. It's like watching waves, helping you understand the rhythm of price fluctuations in the crypto market.

1. Core Idea:
Five waves up and three waves down like ocean waves: a big wave surges up (impulsive wave), followed by several small waves retreating (corrective wave). Wave theory believes that the market generally follows the cycle of '5 waves up + 3 waves down':  Driving waves (1-2-3-4-5 waves): the dominant trend direction (such as the upward trend in a bull market).  Corrective waves (A-B-C waves): counter-trend pullbacks (retracements during a bull market).

2. What Does Five Waves Up Look Like?
1. Wave 1 Launch: A few people enter the market, the rise is hesitant (often mistaken for a rebound).  
2. Wave 2 Pullback: Some people take profits, but it won’t drop below the starting point of Wave 1.  
3. Wave 3 Surge: The public enters, the rise is the strongest and lasts the longest (don’t miss it!).  
4. Wave 4 Rest: Profit-taking occurs, a pullback but does not enter the area of Wave 1.  
5. Wave 5 Celebration: The final sprint, possibly accompanied by bubbles (be cautious!).

3. How Does Wave 3 Down Adjust?
Wave A Drop: The trend reversal begins, many still think it’s a normal pullback.  
Wave B Bounce: “Escape wave,” tempting to bottom-fish, but does not surpass previous highs.  
Wave C Crash: Panic spreads, the decline is fierce, completely ending the upward cycle.
 
Example:  
Assuming a certain cryptocurrency starts:
 1. Wave 1 quietly rises from 1000 points to 1200 points.  
2. Wave 2 pulls back to 1100 points (not below 1000).  
3. Wave 3 erupts, surging to 1800 points (the longest and fiercest).  
4. Wave 4 organizes and pulls back to 1600 points.  
5. Wave 5 peaks at 2000 points, momentum weakens.  
Then it pulls back:
Wave A: Plummets to 1500 points.  
Wave B: Bounces to 1700 points (not exceeding 2000).  
Wave C: Crashes to 1200 points or even lower.
 
4. Conclusion
Wave theory is not a crystal ball, but it can help you understand market sentiment and structure.
Remember:  
1. Counting waves is difficult to perfect; everyone has their own waves. Focus on understanding the logic rather than precise points.  
2. Wave 3 is a friend; be cautious with Wave 5, and don’t catch the knife in Wave C.
3. Combining with other tools (like trend lines, trading volume) is more reliable.  Newbies can use it to develop a 'sense of rhythm,' which is much better than blindly chasing prices up and down!

The crypto world is like the sea; understanding the waves allows you to ride the wind and break the waves.