I’ve organized it into the following text as a 'first lesson' for new fans:
I've been watching candlestick charts for three years and finally understand one thing: the candlestick itself doesn't speak; it merely projects the 'voice' of the market makers onto the screen. Want to predict the future based on a few candles?
No chance; but if you can understand the market maker's secret phrases, at least you won't be led by the nose.
I've summarized three common secret phrases to share with you.
Secret phrase one: False break, real lift.
The script usually goes like this: the price suddenly breaks through important support, and the comment section instantly wails. Retail investors see the breakdown and panic sell. The market maker, however, quietly buys back the chips and pushes the price back above support before closing.
Recognition method:
1. Look at the closing price. If the 1-hour candlestick breaks support and then closes back above, it’s likely just a washout.
2. Look at the trading volume. Instant volume spike upon breaking, but rebound with decreased volume, clear signs of wash trading.
Secret phrase two: The alarm of volume-price divergence.
Price hits a new high, but volume shrinks—typical 'false prosperity.' Conversely, if the price remains stable while volume suddenly increases, it’s mostly the market maker secretly accumulating.
Last year I lost money on a popular coin: the daily chart reached a new high, but the volume decreased day by day, resulting in a sharp drop three days later, wiping out all profits.
Secret phrase three: The crisis of high-level consolidation.
Consolidation is not rest, it's profit distribution. Bottom consolidation means the market maker is accumulating; top consolidation means the market maker is distributing.
Distinction method:
1. Bottom consolidation, volume gently increasing, bearish candles are quickly swallowed by bullish candles.
2. Top consolidation, volume gradually shrinking, bearish candles slowly consume bullish candles. Once accompanied by a surge in open interest, a storm is coming.
Are candlesticks useful?
It's useful, but don't just look at the ups and downs; read the intentions behind them.
When you can understand these three secret phrases, the market is like a movie with subtitles; the plot becomes clear at a glance.
For those who don’t want to go in circles, pay attention to the market maker and see what they're plotting.
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