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1. Identify Trends
• Uptrend: If multiple consecutive bullish candlesticks (green) appear in the candlestick chart, and each candlestick's closing price is higher than the previous one, it indicates that the market is in an uptrend.
• Downtrend: If multiple consecutive bearish candlesticks (red) appear, and each candlestick's closing price is lower than the previous one, it indicates that the market is in a downtrend.
• Trend Reversal Signals: Certain specific candlestick patterns such as hammer, inverted hammer, morning star, engulfing pattern, etc., usually appear during trend reversals and can serve as entry signals.
2. Pay Attention to Support and Resistance Levels
• Support Level: When the price falls to a certain range and repeatedly bounces back, that range is the support level. If the price approaches the support level and bullish candlestick patterns (such as hammer) appear, consider entering a long position.
• Resistance Level: When the price rises to a certain range and repeatedly pulls back, that range is the resistance level. If the price approaches the resistance level and bearish candlestick patterns (such as hanging man) appear, consider entering a short position.
3. Volume-Price Coordination
• Volume-Price Coordination in Uptrend: If the price rises while the trading volume also increases, it indicates strong buying power in the market, consider entering a long position at this time.
• Volume-Price Coordination in Downtrend: If the price falls while the trading volume increases, it indicates strong selling power in the market, consider entering a short position at this time.
4. Special Candlestick Patterns
• Hammer: Appears at the bottom of a downtrend, with a long lower shadow that is at least twice the body, indicating a potential reversal upwards, serving as a signal to enter a long position.
• Inverted Hammer: The shape is similar to the hammer, but the shadow is on the top, indicating a potential reversal upwards, suitable for entering a long position.
• Three White Soldiers: Composed of three consecutive bullish candlesticks, each closing price higher than the previous one’s highest price, indicating a strong upward market, suitable for entering a long position.
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