Last night, I casually threw a class note from an old student into the group, thinking no one would care, but it spread like wildfire in less than half an hour. Several friends came to me saying, "This thing is simply enlightening!"
This reminded me of the predicament of many new fans—just entering the scene, staring at the candlestick chart for a long time, it still looks as obscure as an ancient script. So today, I’ll整理 this note as an "introductory lesson" for new friends.
Inside, there are three "underworld terms"—once you learn them, you can see through the intentions of the operators.
Term One: False Breakout, Real Lift
The routine is often like this:
The price suddenly crashes, piercing through important support levels, and the comments section instantly erupts in chaos. Retail investors glance and think—"It’s broken! We’re doomed!"—and quickly cut losses. But at this moment, the operator secretly picks up cheap shares, and by the time the market closes, the price is steadily pulled back up.
Key Identification:
Watch the close: If the 1-hour candlestick breaks support but can close back above it, it’s likely that the operator is washing the market.
Look at the trading volume: If there is a sudden spike in volume during the drop, but it shrinks during the pullback—this is a typical sign of wash trading.
Term Two: Divergence Alert
The price keeps hitting new highs, but the trading volume keeps shrinking—this is "false fire rising," and it often indicates bad news ahead.
Conversely, if the price is stable but trading volume suddenly surges, that means the operator is secretly accumulating shares, and the next wave of market action is brewing.
Term Three: Crisis of High-Level Consolidation
Many people see sideways movement and think the market is taking a break. In fact, sideways movement is the operator’s favorite "distribution scheme."
Bottom consolidation: Volume gently expands, and bearish candlesticks are quickly consumed by bullish ones—this is the bulls accumulating strength.
Top consolidation: Volume gradually shrinks, bearish candlesticks eat away at bullish ones, but open interest suddenly surges—this is the prelude to the operator dumping shares.
So, are candlesticks useful? Of course they are!
But don’t just focus on the surface of the ups and downs; you must also learn to discern the intentions behind them. It’s like watching a movie: some people only watch the exciting scenes, while others can understand the foreshadowing laid out by the director.
