In recent days, a bunch of people have been asking me, saying: 'Bro, can you stop talking about rolling over? I want to roll, but if I can't even figure out whether the market is going up or down, how can I roll?'
Alright, today let's change our thinking; we won't talk about positions or strategies, but rather how to understand the 'emotion' and 'trend' of a candlestick chart.
To put it bluntly, if you can't understand the candlestick chart, and you rely on feelings to enter the market, it's no different from gambling in a casino. Today you may be lucky and make a profit, but tomorrow a fluctuation might send you packing.
The first thing: Don't stare blankly at a single candlestick; you need to look at the overall 'rhythm'.
Some people look at charts and only see whether the current candlestick is bullish or bearish; this really doesn't work. Candlesticks are not independent lines, but rather a representation of the market's continuous emotions.
For example, if you see three consecutive bullish candlesticks rising, and then suddenly the fourth candlestick is a bearish one that crashes down, many people panic. But if you look back at the overall trend, it is merely a small pullback within an upward channel.
Trends are not determined by a single candlestick, but confirmed by structure and rhythm.
The second thing: The trend has two characteristics, the highs and lows are also high; conversely, it is a decline.
Have you heard of 'higher high, higher low'? It's the most typical pattern of an uptrend.
Each pullback that does not break the previous low indicates that buying pressure is strong. If you see the rhythm of 'breakout - pullback - new high - pullback without breaking', that is definitely a bullish trend.
Conversely, if the highs keep getting lower, and the rebounds can't go up, then don't fantasize; it's not just going to drop, it's accelerating down.
Many people get confused by 'short-term rebounds'; if you zoom out a bit to look at the candlestick chart, everything is clearly written.
The third thing: Sideways movement is not a trash market; it is the main players giving you signals.
Many people particularly hate sideways markets, saying there are no fluctuations and they can't make money. But the truth is—main players never accumulate positions during large ups and downs, but quietly absorb during sideways movements.
You think there is no market? In fact, they have cleaned out all the chips inside.
The day you find a large bullish candlestick breaking through a long-term consolidation box, but you have already sold out, that is the most painful part. While others are accumulating during consolidation, you chase in on the day of the breakout, only to get caught in a reversal.
So I often say: The market is not about 'getting in only when you understand it', but 'you can get in when you are prepared'.
The fourth thing: How do we look at resistance and support levels?
It's not about sitting there waiting with an indicator. It's very simple:
During an uptrend, the previous high is the resistance level.
During a decline, the previous low is the support level.
These places are definitely where the battle between bulls and bears is most intense.
If it breaks through the previous high with increased volume and closes strongly, then there is a chance it can become the starting point of a new round of upward movement.
But if the rise has no volume, and the candlestick body is very short, resulting in a doji? Then it's mostly a false breakout, a trap for traders.
The last point: The key is 'confirmation', not prediction.
Many people's trading failures stem from always trying to predict—trying to bottom fish, trying to top guess, trying to catch rebounds. You are not a god, so don’t waste time predicting the future.
What we can do is wait for the market to give us signals, then decisively confirm and follow.
For example, after a trend is established, if it pulls back without breaking support, then you can go long;
In a downtrend, if the rebound does not exceed the previous high, then you can go short.
When the direction is uncertain, stay out of the market and wait. Guessing based on ratios is always strong.
Having said so much, it's actually all my own hard-earned experiences from falling into traps.
In the past, I used to think about bottom fishing and top guessing every day, and relied entirely on luck to trade. Later, I gradually calmed down and focused all my attention on 'candlestick structure', and that's when I slowly turned my losses into profits.
Now when trading, I only look at two things: whether the structure is smooth and whether the rhythm is stable.
