Compared to the hard work of the older generation in the industrial sector or the struggles of post-80s e-commerce entrepreneurs, my lifestyle seems particularly comfortable and relaxed. In my investment career, I have hardly ever been caught up in complicated business entanglements; life's troubles seem to always take a detour.
In my opinion, the key to investing in digital currencies lies in maintaining a good mindset; mastering the technical aspects is secondary. This calmness and composure may be the secret to my ability to navigate the crypto space with ease and reap substantial rewards.
Crypto work: High win-rate structure 'bottom formation'
The bottom formation usually appears at the end of a downtrend, consisting of 3 to 4 K-lines.
One of the classic combinations that is easiest for beginners to learn and recognize.
The larger the volume of the third bullish candlestick and the higher the degree of engulfing, the more reliable it is.
Paired with a bottom cross star is simply perfect!
1. Technical characteristics of the bottom formation
1. Occurs during a downtrend.
2. Composed of three K-lines: the first is a bearish candlestick, the second is a small bearish candlestick, small bullish candlestick, or cross star, and the third is a bullish candlestick.
3. The third bullish candlestick's body should be large, almost completely recovering or engulfing the first bearish candlestick's body.
2. Technical significance of the bottom formation
The bottom formation is a common high win-rate reversal signal, indicating that after a significant price drop, the short selling energy has almost been exhausted, and the price has no strength to fall further. The subsequent bullish candlestick indicates that the bulls are beginning to counterattack, intuitively reflecting the comparison of the forces of bulls and bears, thus the probability of a structural reversal is very high, and the market outlook is bullish!
The bottom formation perfectly embodies the short-term trend reversal in Dow Theory.
The first bearish candlestick has a lower low than the previous low.
The second K-line shows that the price has stopped falling and is consolidating.
The third bullish candlestick has a higher high than the previous high.
3. Practical Logic
The first bearish candlestick is like a car traveling on the road; the drop of the bearish candlestick is comparable to speed, and the trading volume is like power. The smaller the drop, the slower the speed; the smaller the trading volume, the less the downward power.
The second K-line shows the entire process of a car making an emergency stop, coming to a halt, and making a U-turn.
The third K-line is a bullish candlestick, and like the first bearish candlestick, the rise and trading volume of the bullish candlestick are akin to speed and power. The larger the rise, the faster the speed; the larger the trading volume, the stronger the buying power.
Feedback in the trend means that when the price drops to a certain extent, the bears are exhausted and unable to drop further, allowing the bulls to take the opportunity to counterattack, reversing the trend in one go, so traders can follow up and buy after the bottom formation appears!
Special Reminder:
When the bottom formation appears simultaneously with an ascending flag pattern, the probability of a subsequent rally is very high, which is also an important signal for identifying the end of the flag pattern. Strike while the iron is hot; tomorrow we will discuss the ascending flag pattern!
