Resistance and support levels are both important entry criteria. Resistance and support levels can be converted; when the price breaks below the support level, its original support function will turn into a suppression effect on the price. When the price breaks above an important resistance level, this resistance level changes from a suppression effect on the price to a support effect on the price. There are three types of people in the market: bulls, bears, and onlookers.
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If a resistance level is broken, bulls will make money, bears will lose money, and onlookers will be envious. Since a breakout needs to be validated as true or false, the price will slowly return to the original resistance level to let the market verify. When the price returns to the vicinity of the resistance level, bulls will buy more, many bears will also join the bulls, and onlookers, feeling envious, will also join the bulls, thereby transforming the original resistance level into a support level.
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As the price falls all the way down, it hits a low of 2915 points before rebounding. We can see that the rising lows are continuously being elevated. By connecting at least two low points with a line, we get an upward trend line. If the pullback after the price rises does not break this upward trend line and is supported by it, we can use this as a basis to enter a long position. Now this upward trend line is providing support for the market. When the market breaks below this upward trend line, the original support function of this upward trend line will turn into a suppression effect on the market. When the price breaks below this upward trend line, as long as the price rebounds without breaking this upward trend line, we can use this trend line as a basis to enter a short position.