Introduction to the Theory of Currency Circles: From Basic Concepts to Precise Buying and Selling Points
Basic Concepts
Type: Top type refers to the situation where the high point of the second K-line among three adjacent K-lines is the highest among the three, and the low point is also the highest. The high point of this K-line is regarded as the top; bottom type refers to the situation where the high point of the second K-line is the lowest among the three, and the low point is also the lowest. The low point of this K-line is regarded as the bottom.
Pen: It is composed of two adjacent top and bottom types, and there must be at least one non-overlapping K-line between the two. This combination forms a pen. Pens can be divided into upward pen and downward pen.
Line segment: It is composed of an odd number of pens, at least three pens are required, and the first three pens must have overlapping parts. Line segments can be divided into upward line segments and downward line segments.
Hub: In a trend of a certain level, the area overlapped by at least three consecutive sub-level trends. In an upward trend, the "down-up-down" sub-level trend is mainly observed, and in a downward trend, the "up-down-up" sub-level trend is mainly observed.
Divergence: In a trend of a certain level, the latter trend is less powerful than the former trend. This phenomenon is called divergence.
Buying and selling points
The first type of buying and selling points: appear after the trend divergence, indicating that the trend is weakening or may reverse.
The second type of buying and selling points: after the trend turns, the price returns to the central interval for the first time and does not create a new high or low.
The third type of buying and selling points: when the price leaves the central interval, the subsequent callback does not re-enter the central interval, and this buying and selling point is generated.