After the price rises to a temporary high point, it falls to form a temporary low point, then rises again. The price has failed to break through the previous high in both of the two consecutive upswings, and it has also failed to break below the previous low in both of the two consecutive downswings. At this point, a typical horizontal consolidation pattern appears, and the market enters a trendless state. What we need to do now is draw a horizontal line at the highs and lows of the horizontal consolidation, which gives us the upper and lower bounds of the consolidation we want. If the price rises to the upper bound and cannot break through, we can enter a short position using the upper bound as the resistance level; if the price falls to the lower bound and cannot break below, we can enter a long position using the lower bound as the support level. Our reference for entering the market is very clear, which is the upper resistance level and the lower support level of the horizontal consolidation. If investors prefer to engage in ultra-short-term trading, they can trade multiple times based on these two lines.
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When the price breaks through the upper bound and then retraces to the upper bound for support, we can enter a long position using the upper bound as the support level; when the price breaks below the lower bound and then rebounds to the lower bound for resistance, we can enter a short position using the lower bound as the resistance level.
