I have been trading cryptocurrencies for more than 5 years. I have spent 3 years, more than 1,000 days and nights, and tens of thousands of transactions to verify that this method has a winning rate of 98%.
I have also tested it myself: using a capital of 80,000 yuan, I made more than 80 million using this method of cryptocurrency speculation!
Now I share it with you. If you read this article carefully, you will benefit from it for life! Remember to collect it, study and practice it repeatedly, summarize and review it to form your own trading system.
Table of contents:
1: The basic concept of cryptocurrency market manipulation
2. The basic logic of the cryptocurrency market
3: The K-line foundation of the cryptocurrency market
4. The Curse of Retail Investors in Cryptocurrency Circles
5. Cryptocurrency selection and bottom-fishing
6: The tactic of playing the banker in the cryptocurrency circle: hitchhiking
7: Strategy trading in the cryptocurrency world
8. Basic indicators of cryptocurrency market manipulation
1. Basic concepts of cryptocurrency trading
The difference between cryptocurrency and stocks:
There is no difference in nature, including foreign exchange, futures, gold and silver, precious metals, stocks, and virtual currencies. In the final analysis, it is all a game of capital. Capital needs to be a banker, raise funds, and cut leeks. Cutting leeks requires a platform, a platform where leeks are willing to be cut, so these platforms came into being.
Just like every time you buy a lottery ticket, you feel that you will win. Luck is an instinctive human nature that every normal person has. You are the protagonist on these platforms. You can show your greed, fear, luck, madness, and numbness. No one asks you, no one cares about you. It is entirely up to you to decide. Buying and selling are all up to you. At the moment of placing an order, there is no reality to restrain you. In this world, you finally find a sense of transcendence without restrictions, so you are happy to be cut.
Formally speaking, each country has its own stock rules, and rules are linked to ethnic and national culture. Chinese people have always valued harmony and do not go to extremes, so stocks can only rise by 10 points a day, not more or less, which is the so-called circuit breaker mechanism. Foreign exchange, futures, and virtual currency platforms are open, and open platforms are often dominated by developed countries, so the favorable spreads of these platforms are often closely related to the United States.
It can be said that the national corporate capital is the dealer in the domestic A-share market, while the American capital is the dealer in the currency circle.
To be clear, we must first understand that the emergence of a capitalist game must have a purpose, and its purpose must be to make money. The scale of this money-making is no less than the world war caused by primitive accumulation. Sheep eating people has only become being eaten by sheep. The world war is a resource plunder, and so is the capital game! So don’t think that you are a child of destiny, and you can make a hundred times more by entering the currency circle, reach the peak of life and marry a white, rich and beautiful woman. Each of us lives in the control of capital. Think carefully about this idea. Is it your own? Or is it a dream made up by capital for you? You can only come if you have a dream. If you come, then sorry, the money in your pocket no longer belongs to you. It’s that simple.
Four words: zero-sum game. It does not create any wealth, but it can redistribute wealth from your pocket to my pocket. The overall wealth has not increased, but your money is gone.
2. The basic logic of the cryptocurrency market
How can I make money in the stock market or cryptocurrency?
Let’s clarify two concepts: bankers and retail investors.
To put it bluntly, stocks or virtual currencies are just a game played by market makers using price fluctuations to manipulate retail investors.
Someone said I know the dealer, so what can you do? The dealer said I am here, so what can you do? Do you have a bigger team than the dealer? Do you have more money than the dealer? Do you have more information than the dealer? You have nothing, so what is the point of knowing that there is a dealer?
What we really need to understand is not concepts or news. The false and empty news we face every day are like a rope that pulls you to the south and makes you forget about the north.
What you really need to know is the data, the dealer's data.
How to read the data of the banker? Whether it is stocks, foreign exchange, or the cryptocurrency circle, the most unpredictable thing is "volume".
Quantity ✖ price = money = the money invested by the dealer!
If you know how much money the dealer has invested in a coin pair, at what cost, and how much the dealer intends to earn, then you can relax and eat the meat and drink the soup, and then walk away with the money in your pocket.
It is easier said than done.
The difficulty is that you will be manipulated by a candlestick in front of you, running away from where you should have held, and entering where you should have run. Often you will regret it afterwards: If I hadn't sold it at that time, if I hadn't been impulsive at that time, I wouldn't have been trapped. I said this would rise, and you were bullish, right? I said this would fall, and you were bullish. But if it happens again, you will still choose to be impulsive and regret it, so there is no point in being a wise man after the event! It will only increase your emotional consumption.
The most fundamental reason is that you are not sure. Why? Because you don’t understand the most basic logic.
What is logic? For example, what is the complete logic of life? Birth, adolescence, youth, middle age, and old age. This is the complete logic of life.
So what is the logic of a coin, rising and falling, seeing this you will say, nonsense, I also know rising and falling. The key here is the node, 3 years old should go to kindergarten, 20 years old should get married, 60 years old should retire, this is the node. If a child is three years old, you will know: Oh, this child is going to kindergarten. Similarly, if you find that the K-line has reached the node where it should rise, you will know that you should buy it without hesitation.
The rise and fall can be divided into many nodes, namely, the four stages of accumulation, washing, pulling up, and distribution. If you can understand the accumulation stage, you are halfway to success. This can at least ensure that you will not lose money.
3. The K-line foundation of the cryptocurrency market
Let's talk about the banker's actions separately. To have a correct understanding, you need to have a comprehensive foundation first. If you don't have a foundation, your logic will have no support point and cannot be implemented. Let's start with the simplest K-line.
What is K-line? K-line is a record of prices within a certain period of time. For example, daily K-line, weekly K-line, monthly K-line, short-term K-line of one hour, one minute K-line, etc. K-line has four main elements, the highest price, the lowest price, the opening price, and the closing price.
Taking daily K as an example, concentrating one day's price fluctuations on one line is daily K.
Opening price: the price at midnight of the day.
Closing price: the price at 24 o'clock on the day.
Highest Price: The highest price ever reached during a day.
Lowest Price: The lowest price ever reached during the day.
1 is the highest price, 4 is the lowest price, 2 is the opening price, 3 is the closing price, the area between 1 and 2 is called the upper shadow line, and the area between 3 and 4 is called the lower shadow line. These four elements can evolve into a variety of K-line types, such as cross stars, long black candlesticks, long white candlesticks, hammers, and inverted hammers.
These special K-line graphics often have different meanings in different positions.
For example, if you want to analyze the meaning of a cross star, you need to analyze its formation logic. When the closing price is almost the same as the opening price, a cross star will appear. This means that the price has not fluctuated much during the day. Why? Market sentiment is hesitant or on the sidelines about this price. The dealer does not want to cause huge fluctuations, so it quietly distributes or absorbs chips. If the transaction volume is combined here, it will be more intuitive. Next, it is likely to choose a direction. Generally speaking, when the price rises for a period of time, the appearance of a cross is a sign of a fall. If the bottom has been sideways for a period of time, the appearance of a cross star is often a sign of an upward trend.
Hammer head, inverted hammer head:
The principle of the hammer is that the dealer distributes chips to retail investors, causing the price to fall rapidly. In order to prevent the price from collapsing directly, the dealer pulls the price back little by little while distributing. This pull-up action will also attract retail investors to follow the order, which is more conducive to distribution. At the end, a hammer shape will be formed, which will have a strong pressure on future prices. Similarly, the inverted hammer also has the function of distributing chips. It opens high and lures more, and then falls back after distribution. Generally speaking, the appearance of this shape of K-line after a period of price increase indicates that the dealer has been distributing chips, which represents a signal of escape. If the dealer has completed the distribution, the price will plummet, and there is a risk of being locked in. On the contrary, the same principle is applied at the bottom. Often, after the price has been sideways for a period of time, the appearance of an inverted hammer means that the dealer is absorbing chips, which is a follow-up signal. If you buy at this time and are patient, you can often get a good return.
Big Sun and Big Yin:
After the banker has washed the market for a period of time, a big Yang line will appear. If the previous wash is sufficient, it is for the real rise, and the purpose is to make retail investors miss out. If the previous wash is not sufficient, and a big Yang line suddenly appears, there will often be a big Yin line the next day. The purpose is to wash the market. If you panic and sell, then your chips will be mine, and you can only watch when I pull up again. In fact, if retail investors don’t care about the point and buy frantically, once this happens, the banker will wash the market again and hang the retail investors who chased in on the flagpole. Therefore, the appearance of the big Yang is the charge horn sounded by the banker. You can choose to enter the warehouse when the big Yang line retreats. If the price drops sharply after entering the warehouse, it is a signal of washing the market. The right amount of replenishment can lower the cost, and the time period for the next wash will be greatly shortened, so just wait for the wash to end and wait for the profit. The big Yin is the opposite.
There are two situations when a big Yin line appears. One is a false drop, the purpose is to scare away undetermined retail investors, receive this part of the chips, achieve the purpose of absorbing chips, and prepare for the subsequent pull-up. The other is a real drop, which is often after the top dealer distributes the chips. Without the support of the main force, the price will fall straight down. The panic of falling prices causes retail investors to flee, which further exacerbates the formation of a big Yin line. This kind of big Yin line has lost the participation of the main force and is the result of the mutual oppression between retail investors.
In short, the judgment of the K-line shape should be combined with the current stage, whether it is consolidating or rising, distributing or collapsing, and it often has different meanings at different stages.
Then the question is, how to determine which stage the current K-line is in?
4. The Curse of Retail Investors in Cryptocurrency Circles
About the curse that the price goes down when you buy and goes up when you sell.
If you think about this question from another angle, you will understand that it is a very simple truth. If I am the dealer, I have raised such a large team and invested so much money. My purpose is to make money from you, not to help you make money. This is the most important point. All actions are based on this point. I have worked hard to lurk for several months or even a year to secretly collect the bottom chips. Why should I take you flying? So I must drive you off the bus before the price rises. How to drive you off? Wash the plate!
After I lurked for a while, I got enough chips, enough chips to control the market. Then the fate of the entire K-line was completely in my hands. Mastering the K-line was like holding the hearts of retail investors. The K-line was a rope, and retail investors were a group of sheep. I would lead you wherever I wanted, and I would play with you. You said you would not be easily deceived, but you overestimated yourself. As long as you still have humanity and as long as you have something to ask for, you will not be able to be calm. Emotional fluctuations only take a moment, and buying and selling actions only take a second. You will not have time to realize that your emotions are being manipulated. When you find all this, you have completed the buying and selling actions, and this is what I want you to do.
When you think that the coin will rise, others will also think so. Most people will think so. So not only you buy it, but others also buy it. If you all come in, can it still rise? If it rises, you all make money and run away. Who will I find to buy it? So once you all follow in, I will wash the market until there are no more unsteady chips. Unless you uninstall the platform after buying, then I really can't do anything about it, but how many people can do this?
On the contrary, when no one thinks that the coin will rise, no retail investors flock in, and the previous retail investors have almost washed out, then I will start to rise, and directly pull up a big positive line. You can chase it or not. If you chase too much, I will repeat the wash action again. If you don’t chase? Then why don’t I continue to rise, and you will miss the opportunity.
Therefore, it is inevitable that the price will fall as soon as you buy and rise as soon as you sell. This is a result caused by the actions of the vast majority of retail investors. This is a dynamic orientation.
As long as you are "the majority", you will fall into this curse. How to be a minority? The banker hunts retail investors, and we hunt the banker. There are many great people in the currency circle. When the banker hunts retail investors, we watch the show, when the banker pulls up, we follow the market, and when the banker distributes chips, we run away.
Their common trait is patience. Like a wolf, they stare at their prey without moving.
Only by knowing yourself and the enemy can you win every battle. Only by understanding the enemy's movements can you strike in a targeted manner.
I believe that experienced people have all seen the picture below, and may even know it by heart.
After seeing this picture, you will think, how could I be so stupid? Don't believe it, right? Just open your trading records and you will know. Why is it so difficult to do something that is easy to understand? It's just human nature. Trading is based on human nature. Here is an example:
There is no new low in the new decline on December 31, 2022. This is a signal of bottoming out. You can buy at this time and wait to sell in March 2024. It is very simple and clear at a glance. When you see this, you may scold me and say that the K-line has come out now. If you say so, what if it has not come out?
Each complete K-line is like a complete civilization. History will not repeat itself, but it keeps repeating itself.
If you dream of getting rich overnight, do contracts, leverage, increase 10 times, 100 times, and want to operate more than ten times a day, then the candlestick chart that comes out or not will have no meaning to you, and your money will eventually return to zero. Don't deny it, patience is a luxury for most retail investors. The whole process in the above picture takes about a year. I want to operate dozens of times a day, let alone a year.
Of course, professional short-term traders are an exception. I admire short-term traders very much. They need not only patience but also keen insight. If you have nothing but guesswork, then you are gambling, and you are gambling with a dealer who will cheat.
How can you not lose?
5. Cryptocurrency selection and bottom-fishing
If you want to play against the banker, you need to have a comprehensive understanding of the banker. Each banker has his own unique trading methods, some are bold and aggressive, some are cautious, some are bloody and violent, and some are gentle and elegant. According to the attitude towards retail investors, they can be divided into two types: good bankers and bad bankers. Look at the two comparison pictures:
The weekly chart trend, from around 1 in May 2022 to the highest price of 12 in April 2024, is a nearly 11-fold return in two years. It starts from the bottom and slowly climbs all the way. As long as you are on the bus, it won’t take long to give you returns. There is not much fluctuation and it won’t scare you. I make money and I will make money with you. It gives you a feeling of a big brother. This kind of dealer is hard to come by! Most of them are as follows:
The big yang lures in more, distributes to retail investors at high points, and then the big yin cuts off the heads. Many small leeks are hung on the high needle tip. The method is extremely violent and cruel. The same trading method is used repeatedly and never gets tired of it. It is difficult for you to make money in front of this kind of banker. Even if you are lucky enough to make a little money, you will eventually return it to him. Not only will you not make any money, but you will also die miserably.
There is no shortage of such dealers in the cryptocurrency circle, and their trading methods are ruthless.
There is a saying in the stock market, called the daily limit gene. The word gene is also applicable in the cryptocurrency circle. If the banker has used this method before, then he will most likely use this method next time. Each trader has his own personality, which is reflected in the different trading methods. It is easy to change the country, but it is difficult to change one's nature, unless the banker changes.
Of course, there is another type that is average. It washes the market when it needs to, and pulls up when it needs to. There are sideways trading, fluctuations, and a main upward wave.
By observing the trading techniques used by the dealer, we can roughly judge what type of dealer he is, and then you can estimate the difficulty of making money in this dealer. Of course, choose the one with the easiest difficulty.
With this basic concept, let's take a look at the market maker's entry point, which is usually referred to as the bottom of bottom fishing.
What is the “bottom”? Can we copy it?
Let’s first talk about how the “bottom” is formed. When the price of a currency pair falls below its market value, the “bottom” is about to appear. How do you understand it?
Everyone should know about the "Suan Ni Hen" incident. What is the normal value of a pound of garlic? When the price of garlic is driven up by some capital with ulterior motives, it has actually deviated far from its market value. If a pound of garlic costs 3 yuan and is driven up to 10 yuan, then the extra 7 yuan is a bubble. Remember, bubbles will always burst! When this bubble bursts, garlic will drop from 10 yuan to 9 yuan, 8 yuan, 7 yuan... When the price finally drops to 3 yuan, people will think that this is its normal price, and their purchasing power will increase. At this time, the price will gradually stabilize. The price at this time is the bottom price of garlic, that is, the market value of garlic.
Of course, this is just a conceptual statement, so how do we judge it based on the K-line pattern?
When the value of a commodity is recognized by "most of the capital", its value will be relatively stable. This "most of the capital" can be regarded as the dealer, and the value recognized by the dealer is basically its market value.
Next, let's talk about its logic. When a commodity is suddenly purchased frequently, it is impossible for it to remain stable at the original price. Scarcity makes things more expensive. At this time, the price will rise. Once the price rises, the purchasing power will decrease relatively. If garlic is expensive, I can just eat onions! When purchasing power decreases, the price will seek balance and fall again. The following sentence is very important:
If it falls to a new low again, it means that the last low price was not recognized by the market maker, which means that the market maker did not really buy it.
When the price falls to a new low again, a large amount of purchasing power will appear again, and the price will rise again. When purchasing power decreases, the price will fall again. Note that if the price does not return to the original lowest price at this time, it means that there is a problem: "capital is continuously acquiring".
Sustained purchasing power is the strong support for not setting new lows.
So how do we determine the bottom?
When a currency pair falls for a period of time and reaches the first low point, how do we determine whether the first low point is the bottom?
Wait for the low point of No. 2 to come out. No. 2 hits a new low, proving that No. 1 is not the bottom. How to judge whether No. 2 is the bottom? Wait for No. 3 to appear. There is no new low, which means that "capital is continuously acquiring." No. 2 is preliminarily judged to be the bottom. Why is it a preliminary judgment? When No. 4 appears, the bottom can be basically confirmed.
Then you may ask, why don't I buy it directly when it appears on the 2nd? Isn't it too late when the price should have risen a little by the 4th?
If you have this idea, you need to re-read the above analysis. Even if you copy it, you don’t copy No. 2, but No. 1. Remember that No. 2 is not the bottom before No. 3 comes out!
Even if you enter at number 2, you will be washed out by the subsequent wash-out, and you may not be able to complete the entire climbing stage. Therefore, there is no such thing as being late or not, it is a question of whether you can make judgments. If you can make correct judgments eight out of ten times, then you can make money.
If you want to rely on luck to buy at the bottom, there is another bottom below the bottom. If you catch a flying knife with your bare hands, your hands will definitely be broken.
The red arrow in the picture is the actual buying point. You can open any K-line chart to simulate it. In fact, think about it, what will happen in a complete decline and rise? There will definitely be a turning point. Think carefully about what is a turning point?
6: The tactic of playing the banker in the cryptocurrency circle: hitchhiking
Let me start with a strategy: every decline during the rise is an opportunity to enter the market, and every rise during the fall is a signal to escape. Take a look at a few pictures to get a direct feel:
Let’s think about a question first. Does such a powerful market maker have any weaknesses for retail investors?
Yes, this weakness is the dealer’s throat, and what we have to do is to hit the target with one strike.
When a banker sneaks into a currency pair and starts to collect chips, then this currency pair will most likely not hit a new low, and you will know: Oh, this banker has started to sneak in. Individual sporadic events that hit a new low will also quickly pull back. When the main force has collected enough chips, one thing the main force has to do is to start raising the price. Even if a large number of retail investors get on board at this time, the banker has to raise the price because he has enough chips. At this time, what we have to do is to catch this wave of free ride and eat meat and drink soup.
The bottom-picking position mentioned in the previous article is precisely inserted at the position of the dealer: the throat.
So when does the trend start? When a currency pair stops hitting new lows, it means that the market maker has come in, which means the upward trend has begun. This is the trend.
Remember, once the trend starts, every decline is an entry opportunity that should not be missed.
During the rise, there will be many retail investors following the market, and the purpose of the decline is to clean up the market, but the reality is often that you chase the high point when the market is rising, and you can't stand the loss and sell at the low point when the market is cleaned up. Pull out your trading records and look at them. It is ridiculous if you think about it carefully.
Remember, every decline in the upward trend is a wash, just a wash. Don't think that the coin is going to fail, fall through, return to zero, or be delisted every time it falls. It is just a wash. Washing is at best a fake move. What are you afraid of? Even if you don't know which point to buy or sell, as long as you have this concept in your mind, you have surpassed 80% of retail investors. At least the K-line has a big framework in your eyes. As long as there is a big framework, you have a bottom line in your heart, and the rest is patience.
Then someone said, this is because the K-line chart has come out, so you can naturally draw it like this. How would you know if it hasn’t come out?
Don't be stubborn, don't get stuck in a dead end, think about what the logic of this process is! Some people say that I entered at the throat and I also entered when it fell, but how do I judge which place is the top and when to exit?
As the saying goes, those who know how to buy are apprentices, and those who know how to sell are masters. In order to prevent you from seeing that he is running away, the dealer often does it in a very obscure way, so running away is much more difficult than bottom fishing. The fact is that as a retail investor, if you happen to be at the high point, it is your luck. It is impossible to eat the whole fish from the head to the tail, and eating a section is enough for you to digest. You can only get your money by running away before the dealer runs away.
As for how to judge whether it is the top, one is to look at the volume, and the other is to see whether the currency price will reach a new high. This will be discussed later in an article specifically on how to judge the dealer's top.
The logic of the tactics mentioned at the beginning also includes an ultimate skill: inserting the needle.
Among these methods of washing the market, I particularly like the insertion of pins, especially the insertion of large pins. I often get excited instinctively when I see this kind of insertion. Because I know exactly what the main force wants to do at this time. I call this kind of pattern a slingshot: the tighter the slingshot is pulled back, the farther it will shoot. For example:
So is it scary to insert a pin? Not scary, it’s even a little cute, but the premise is that it is in an upward trend. On the contrary, the same reasoning applies. When the price of the currency reaches two or even three times the profit, the profit can even reach ten or a hundred times in the currency circle. It is no exaggeration to say that even if you can get 50% in this process, you are already standing at the top of the pyramid of retail investors. Once: the price no longer reaches a new high, be careful. Remember these 12 words. Next, once the avalanche and the shattered bones, every rise is an opportunity to escape. Don’t expect it to rise a little more, don’t hesitate, otherwise it will be a set for ten thousand years. There is an extremely dangerous operation in this: betting on a rebound. The income is not high but the risk is extremely high. It’s not worth the loss to get something out of the fire. 7: Strategic trading of the currency circle’s dealer tactics. Let’s first take a look at how the pressure and support levels are formed?
It can be said that the pressure level is created by the joint strength of retail investors, and retail investors are still very united in this area. When a peak has many retail investors, these bodies will become numb and indifferent.
It is an interesting phenomenon that no matter in the stock market or in the cryptocurrency circle, people don’t care about the price after a big drop. They rush to sell the price when the price rises a little, fearing that the profit will be withdrawn. The real way is to stop loss in time. If you hold the trend, you should wait patiently for the harvest. It is a pure waste of time to work hard for decades and then leave after taking two points!
When the price returns to this position again, everyone rushes to get out of the position. People really know how to cherish something only after they have lost it. After waiting for so long, that point is finally back. How can they not be excited? Since the selling pressure to get out of the position is too great, the pressure level is formed and it has the power to suppress.
How is the support level formed?
By the same token, support levels often only play a supporting role in an upward channel. When many retail investors buy in at the last high point, when the currency price pulls back to this price again, due to the bullish market sentiment, the selling volume is very small, thus forming an actual support, and the price will often pull back to this place and then stop falling and rise again.
The above picture also shows the common tactics used by some dealers, which are the four steps of penetration, withdrawal, pressure and pull. However, under the mechanism of the currency circle, some dealers have reduced this kind of gameplay. Some only use it once or twice, and the currency price has reached the ceiling.
Remember, there is no absolute support level and no absolute pressure level. Support and pressure levels only work in a fixed trend. There is no pressure level that cannot be broken, and no support level that cannot be broken. Therefore, simply drawing lines is useless. As I said before, the trend is the overall framework. Without a framework, any indicator is not judgemental.
As for how to judge the trend, you can look at the basic logic introduction in the previous articles. If you understand it, you will not ask this question again. Someone said: I will just buy a robot. I don’t need to look at the trend. It will directly give buying and selling strategies.
I can tell you: all strategy trading robots, or various single composite indicators, Bollinger Bands, energy tides, triple indicator averages and so on, you will find that you still don’t understand them even if you have learned them, because all trading strategies have one thing in common, which is the delay. Only when the K-line comes out will they give trading signals based on the K-line. What’s the use of it?
Let's talk about strategy trading robots, especially the so-called trading artifacts on the market. The system automatically gives buy and sell signals. At first glance, the buy and sell signals given are amazing. If you think so, I also think your IQ is amazing. Who else should I cut? I have also experimented with many sets of strategy trading in the foreign exchange system, and the results are all artificial idiocy. My nickname Night Watchman is also the name of a trading system. It is a very powerful private equity system, but if it is not operated manually, it is also an artificial idiocy.
Just think about it, if artificial intelligence can really make K-line one day, the financial system will be at the point of collapse, and all strategic transactions will either be cutting leeks or need to cooperate with human judgment. There are only these two types, so the valuable strategic systems are used by their own people, and the worthless ones are used to cut leeks.
8. Basic indicators of cryptocurrency market manipulation
What should a normal disk contain?
Generally speaking, the entire disk is divided into two parts, the main and the secondary. You can also put the main chart separately, depending on your personal habits. Let's look at the main chart first: What indicators are generally used for the main chart? I am used to using the weighted moving average EMA, of course there are also MA. What is the difference between the moving average MA and the weighted moving average EMA? The simple explanation of MA is to average the stock prices of several days and then connect them into a line. For example, the 5-day moving average: average the prices from the first to the fifth day, average the prices from the second to the sixth day, average the prices from the third to the seventh day, and so on. Connecting these values into a line is the 5-day moving average.
How to understand? If the current price is above the 5-day moving average, it means that the market purchasing power is relatively enhanced in the past five days. Otherwise, it means that the market purchasing power is continuously declining in the past five days. 5 days is too short. What if we change it to the 120-day moving average? In other words, if the market price stands on the 120-day moving average, it means that the purchasing power in the past 120 days is continuously rising? What is this signal? Purchases in a short period of time may be volatile, but purchases in a long period of time will form a trend, so the 120-day moving average has the function of judging medium- and long-term trends.
If the price successfully crosses the 120-day moving average from the 120-day moving average and stands firm, it means that there will be a short-term or long-term rising market. This is the meaning of the moving average. What is EMA? It is an algorithm based on MA. As for how to calculate it, it is relatively complicated. Its characteristic is that it increases the sensitivity of MA, allowing the moving average to follow and adjust when the short-term K-line changes drastically. As shown in the figure, 12345 are EMA5, 20, 40, 60, and 120 day lines respectively. The reason why I choose EMA is that it is smoother than MA, pleasing to the eye, and can increase the accuracy of judgment. The difference is not very big. The latter is recommended for short-term trading. The relationship between the moving average and the price: the price is like a dog running around, and the moving average is like a rope. When the dog runs too far, there will be tension between the rope and the dog. However, the moving average only cares about the price and does not pay attention to the combination of quantity, so the dealer will use the moving average to create various traps to lure more and less.
Remember: it is foolish to talk about price without considering the volume. Look at the perfect arrangement of these moving averages:
Situations where the moving average plays a supporting role.
The situation where the moving average plays a suppressive role. Feel it carefully. How to use the moving average to help us make better judgments? What do some indicators extended from the moving average, such as: golden cross, dead cross, price support, price pressure, golden spider, dead spider, etc. mean? Golden cross: The cross formed by the short-term moving average crossing the long-term moving average has a supporting effect on prices in the short term. As shown in the figure:
There are two golden crosses in the figure: the cross formed by the 5-day moving average crossing the 10-day moving average, and the golden cross formed by the 5-day crossing the 20-day moving average. The price successfully rose in a short period of time. The 5-day golden cross indicates that people who bought within 5 days are willing to use more than the average price within 10 days to chase the rise, so the short-term demand is greater than the supply, and the price rise is natural.
The cross formed by the 5-day moving average crossing the 10-day moving average is called a dead cross, which has a suppressive effect on prices in the short term. Golden cross and dead cross have the function of judging the next trend in a certain sense. However, they also have lags, and if they are short-term moving averages, they are more limited. How to increase its power? Multiple crosses appear at the same time: Golden Spider and Dead Spider.
The picture shows a typical dead spider: the 5-day moving average crosses below the 10-day and 20-day moving averages, and the 10-day moving average crosses below the 20-day moving average, forming a six-legged spider-like shape. It has a strong short warning.
On the contrary. The shape formed by the 5-day crossing the 10-day, the 5-day crossing the 20-day, and the 10-day crossing the 20-day is called the golden spider. The appearance of the golden spider indicates the arrival of bulls. The appearance of the spider often indicates the market trend for the next period of time, because it has three cycles involved at the same time. As for how long the trend is, it depends on the moving average of the participating moving average. In the same way, as long as the moving average crosses, it has a delay. How to increase its stability and durability? So further extend: price support and price pressure. Price support: The triangle formed by the three intersection points formed by the 5-day moving average crossing the 10-day moving average, the 10-day moving average crossing the 20-day moving average, and the 5-day moving average crossing the 20-day moving average has a supporting effect on the price for a period of time in the future. As shown in the figure:
Not only did it form a price support, but it also formed a double price support. Facts proved that there was a subsequent upward trend that lasted for three months.
Price pressure: The triangular area formed by the intersection of the 5-day moving average crossing below the 10-day, the 5-day crossing below the 20-day, and the 10-day crossing below the 20-day will have a suppressive effect on prices in the future.
It is also a double price pressure pattern. Under this price pressure, the price fell for a whole year.
Therefore, generally speaking, the beginning of a market trend is often preceded by the appearance of a price support or price pressure pattern. Two price support or price pressure patterns are more stable. When such patterns appear, longs can enter the market at a low price, and vice versa. Note: Horizontal and oscillating market trends are excluded.
Let's look at the picture above and think about a question: How did the two horizontal double-price support appear? Why did this market situation occur?
The above are the summary of my 5 years of practical experience and technology in cryptocurrency trading. They may not be suitable for everyone. Everyone needs to use the summary in combination with their own practice. As a trader, the most terrible thing is not that you have technical problems, but that you are not aware enough and fall into these trading traps without knowing it! There is no invincible trading system, only people who use the trading system invincibly! This is the truth. The trading system will eventually return to people! #BNBChain爆发 #加密市场回调 #美国加征关税
