Many newcomers to the cryptocurrency space are still closely watching the fluctuations of the candlestick chart, yet they fail to grasp the deeper 'hidden messages' within.
If that's the case, I will carefully organize this insight into a 'mandatory first lesson' for new fans. Every word and sentence is my heartfelt truth, learned from three years of closely monitoring candlesticks and experiencing countless traps: The candlestick chart itself never possesses the ability to 'foretell the future'. It is more like a wide curtain that clearly 'projects' the true intentions and operational methods of the market makers in front of us. Is it possible to accurately predict future price movements based solely on a few candlestick patterns? This is almost nonsense; however, if you can learn to interpret the 'hidden signals' conveyed by market makers through candlesticks, then you can at least avoid 80% of the traps and risks, no longer easily becoming 'chives' that are randomly harvested.
I will now break down the three most effective “signals” from the main force for you, each accompanied by specific judgment techniques from practical experience:
Signal One: Fake break is actually a washout
This is the most commonly used psychological tactic by the main force; I have witnessed countless retail investors fall for this trick. The typical routine goes like this: the price suddenly breaks through all key support levels that traders are closely watching, and the comment section instantly boils over, with someone exclaiming "it broke, run quickly!" Panic spreads as retail investors cut their losses—while the main force is quietly waiting to accumulate shares at a low price. By the time the close approaches, they pull the price back above the support level, leaving the selling retail investors far behind.
How to see through this "false move"? Remember two key points:
Observe the closing results: If the 1-hour candlestick shows a break below support, but the daily close can stand above the support level again, it is most likely a washout, so don’t rush to cut losses.
Pay attention to abnormal trading volume: The trading volume suddenly expands at the moment of breaking (deliberately creating a panic atmosphere), but shrinks during the rebound; this is a typical trace of "wash trading", indicating that the main force is creating a false impression by buying and selling to themselves.
Signal Two: Divergence between volume and price hides a crisis
When the price trend and trading volume show "different frequencies", it is necessary to raise vigilance—this is a warning signal from the market. For example, if the price keeps hitting new highs while the trading volume continues to shrink, this is a typical "false rise"; it appears that the bullish momentum is fierce, but in fact lacks financial support, making it easy to plummet later; conversely, if the price is consolidating sideways while the trading volume suddenly expands, it is often the main force secretly accumulating shares in preparation for a subsequent rise.
Last year, when tracking a popular cryptocurrency, I suffered a significant loss: the daily chart showed prices continuously hitting new highs, but the volume decreased for three consecutive days. I foolishly thought "it could rise again", but three days later, a huge bearish line crashed down, and all previous profits were wiped out—since then, whenever I see a divergence between volume and price, I will immediately reduce my position and observe.
Signal Three: High position sideways hides danger
Many people believe that sideways movement is the market’s "resting", but it actually depends on the specific position—the sideways movement at the bottom and the high position are fundamentally different. When the bottom is sideways, the main force is quietly accumulating shares, and the trading volume will moderately expand; even if a bearish line appears, it will be quickly swallowed by subsequent bullish lines. However, when the high position is sideways, it is often the case that the main force is secretly offloading shares; at this time, the trading volume will gradually shrink, and bearish lines will slowly devour bullish lines. If there is a sudden increase in positions at the same time, it indicates that the main force is rapidly changing hands, and a sharp decline is likely to follow.
Friends often ask me: "Is candlestick analysis effective?" My answer is: effective, but don't just focus on the superficial ups and downs; you need to understand the trading logic behind it. Just like appreciating a movie, if you don’t understand the language of shots, you can only watch the excitement. Understanding these "signals" allows you to truly see through the "script" carefully arranged by the main force.
If you don’t want to keep "running in place" in the market, come to my homepage often—I will periodically break down the main force's operating logic, so we can open the "subtitles" of the candlesticks together, avoid pitfalls, and seize real opportunities.
Welcome to follow A Xin, where you can learn and communicate in real trading, and clearly understand the direction and strategies of the market. Regardless of the market style, being aware in advance allows for better mastery!!!
