Many beginners are easily disturbed by short-term fluctuations when looking at candlesticks, leading to frequent operations and losses.
Core issue: You only focus on 1-minute and 5-minute candlesticks while ignoring the larger trend and key positions.
This multi-cycle candlestick trading method can help you filter out noise and find high-probability trading opportunities.
Step one: 4-hour candlestick — define the main direction.
Core function: Determine whether the market is rising, falling, or sideways to avoid counter-trend operations.
How to determine the trend?
Uptrend (mainly going long)
High point & Low point synchronously increase (each pullback is higher than the previous one).
Moving averages in bullish arrangement (MA10 > MA30 > MA50).
Trading strategy: Buy low at support levels during pullbacks, do not chase highs.
Downtrend (mainly going short)
High point & Low point synchronously decrease (each rebound is lower than the previous one).
Moving averages in bearish arrangement (MA10 < MA30 < MA50).
Trading strategy: Short at resistance levels during rebounds, do not catch the bottom.
3. Sideways fluctuation (wait and see or short-term trading)
Price fluctuates within a fixed range (no obvious trend).
Trading strategy: Sell high and buy low, or wait for a breakout direction.
Key point:
Do not take counter-trend trades (for example, if the major trend is down, do not desperately catch the bottom).
When the trend is unclear, it is better to stay in cash.
Step two: 1-hour candlestick — find key positions.
Core function: After the trend is determined, find support (buy point) and resistance (sell point).
How to identify key positions?
Support level (suitable for buying)
Previous low points, upward trend line, moving averages (like MA20).
Example: BTC rebounded multiple times at $60,000, indicating strong support here.
Resistance level (suitable for selling)
Previous high points, downward trend line, Fibonacci retracement levels (like 61.8%).
Example: ETH encountered resistance multiple times at $4,000, indicating strong resistance here.
False breakout trap
Price briefly breaks through resistance/support but quickly falls back → may be a false signal.
Solution: Wait for a closing confirmation, or assess with transaction volume.
Key point:
Only trade at key positions, avoid entering at intermediate price levels (easily shaken out by fluctuations).
When a breakout fails, stop loss promptly.
Step three: 15-minute candlestick — precise entry.
Core function: Find high-probability entry signals near key positions.
How to confirm the timing of entering?
Reversal signal
Engulfing pattern (bullish candle completely engulfs the previous bearish candle, or vice versa).
Bullish divergence/Bearish divergence (price makes a new low but the indicator doesn't, or vice versa).
Golden cross/Death cross (short-term moving average crosses above/below long-term moving average).
Breakout confirmation
Voluminous breakout (volume increased by over 50% compared to the previous 3 candlesticks).
False breakout filtering (only a true breakout if it retests and does not break).
Stop loss setting
Going long: Set stop loss 2%-3% below the support level.
Going short: Set stop loss 2%-3% above the resistance level.
Key point:
Do not enter early, wait for signal confirmation before acting.
No stop loss = suicide.
Multi-cycle combined with practical case studies (taking BTC as an example)
Scenario 1: Low buying opportunity in an uptrend
4-hour chart: BTC is in an upward trend (high points & low points synchronously increase).
1-hour chart: Price retraces to $62,000 (previous support level + MA20 moving average).
15-minute chart: Bullish engulfing + RSI bullish divergence appears, confirming buy signal.
Operation:
Buy position: $62,000
Stop loss: $60,500 (below support level)
Target: $65,000 (previous high resistance)
Scenario 2: Shorting opportunity in a downtrend
4-hour chart: BTC is in a downward trend (high points & low points synchronously decrease).
1-hour chart: Price rebounds to $64,000 (previous resistance level + Fibonacci 61.8%).
15-minute chart: Bearish engulfing + MACD death cross appears, confirming short signal.
Operation:
Short position: $64,000
Stop loss: $65,000 (above resistance level)
Target: $60,000 (previous low support)
Common mistakes & solutions
Error 1: Only looking at small cycles, ignoring the larger trend.
Result: Counter-trend operation, frequent stop losses.
Solution: First look at the 4-hour trend, then find the 1-hour key position, and finally enter using the 15-minute chart.
Error 2: Entering early without waiting for signal confirmation.
Result: Tricked into entering by a false breakout, stop loss triggered.
Solution: Wait for a reversal pattern + volume increase in 15 minutes before acting.
Error 3: No stop loss, holding until liquidation.
Result: Small loss turns into a big loss.
Solution: Always carry a stop loss on each trade, with losses not exceeding 3% of capital.
Summary: The core of multi-cycle trading method
Large cycle determines direction (4 hours: trend determines long/short).
Medium cycle finds position (1 hour: support/resistance levels are key).
Small cycle waits for signals (15 minutes: reversal patterns + volume confirmation).
Remember:
Trend > Position > Timing, the order cannot be wrong.
Do not trade frequently, only take high-probability opportunities.
Strict stop loss, protecting capital is always the first principle.
If you still have difficulty reading candlesticks, you can review historical trends or ask me to analyze the current market for you.
Trading is not gambling, but a strategic wait and execution.
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