$AI April 18 long position logic explanation, from entry to the current maximum gain of 17%. First, look at the chart before entry:
Micro level:
K1: A small hammer line accompanied by increased volume, which belongs to volume stagnation, located on the right side of the consolidation area. Interpreted through Wyckoff, it indicates that the second type of stopping behavior is likely to lead to a significant price rise. However, since the price is below the resistance, if this trade does not follow the right side, it will require speculation, but the risk-reward ratio is very good.
K2: A hammer line accompanied by normal trading volume, the support test in the consolidation area is effective, and the subsequent bearish candle did not make a new low, so there is no need to worry, thus maintaining a bullish outlook.
K3: A small hammer line accompanied by extremely low trading volume indicates that there is no selling pressure, and the main force can easily push the price up.
K4: The two previous candles form a morning star, both showing extremely low trading volume indicating the main force is controlling the market.
K5: This refers to a bullish Pinbar, which is incorrectly placed in the image. Its candle pattern is also quite prominent in the market with relatively high volume, and there is a false breakdown behavior followed by a recovery in a relatively stable market, so the direction should be bullish.
K6: A doji star accompanied by low trading volume, isn't that a sign of abnormal behavior? The doji star represents the result of intense competition between bulls and bears, while the trading volume is unusually small, which can only indicate that the main force is controlling the market, so the subsequent bearish candle is also without volume.
K7: Interpreted similarly to K3, this is a supply test in the market.
K8: Strong winds and high waves accompany high volume, this is normal, and the trading volume verifies this point, but it shows that the bulls narrowly won.
K9: Price action is similar to K8, but the trading volume differs. It can form a bullish engulfing pattern with K10, and the trading volume is comparable, possibly absorbing the supply brought by K10, indicating the market is about to reach the bottom.
K10: A prominent large bearish candle accompanied by inconspicuous trading volume, indicating that this is a trap with a short squeeze component or that the short-term market has reached consensus.
K11 and K12 are very typical behaviors explained additionally in volume-price analysis. The K11 candle pattern is a bearish Pinbar (shooting star) indicating market weakness. If this combines with the excessive declines caused by the previous panic selling candles, the main force buys at K12, and sells the accumulated chips at the rebound high of K11, indicating that the market is still in a bear market, and it is not advisable to catch the bottom!
Both rectangles A and B exhibit low trading volume, with no floating supply following.
Macro: From the panic selling shown in K11 and K12, which cannot catch the bottom, to the absorption of supply and the resulting low trading volume observed, and finally the hammer line on the right side of the consolidation area indicating that the accumulation has ended, the market is about to start a significant rise. This entire process follows the standard order of Wyckoff trading. Therefore, through volume-price analysis, the recent resistance level above where the accumulation has ended can be completely overlooked and will definitely be broken through; the result is no floating supply + conditions formed for going long; thus this trade is also a very simple problem.
The knowledge points examined include: recognizing and understanding the second type of stopping behavior in Wyckoff, recognizing and understanding floating supply, recognizing supply tests, understanding and using bullish Pinbar, recognizing and understanding the bullish engulfing pattern, recognizing and understanding the abnormal price-volume patterns of doji stars, recognizing and understanding the abnormal price-volume patterns of large bearish/bullish candles, identifying excessive declines caused by panic selling, understanding the combined effects of hammer lines and shooting stars, recognizing consolidation areas, identifying and understanding support levels, and recognizing and understanding descending channels.
