Let’s talk about how to look at market trends. For example, when the price of a certain asset drops to a key support level, such as a previous low, or the 0.618 golden ratio level calculated using the Fibonacci sequence, you must not impulsively invest all your capital. First, observe the K-line patterns to see if there are any typical reversal signals like hammer candlesticks, engulfing patterns, or doji stars. You need to understand that the signal given by a single K-line may not be reliable and may very well be a trap set by market leaders to lure in short sellers, so a second verification is necessary.

Then, look for auxiliary signals by simultaneously monitoring multiple technical indicators. Check if the MACD indicator shows a bottom divergence, meaning the price makes a new low, but the MACD does not follow suit and instead shows signs of rising; also see if the KDJ indicator starts a golden cross upward from the oversold area; at the same time, pay attention to whether the trading volume shrinks and stabilizes during the price decline. This is akin to flying a plane, where you need to monitor multiple instruments at once. Only when all indicators align can it indicate a potential market trend reversal.

The most critical third verification is to wait for a second test of the price. After the price first tests a support level, it often rebounds and is likely to undergo a second test. If during this retest the support level remains solid and is not broken, and the K-line again closes with a bullish candle, this serves as solid evidence of effective support. Entering the market at this time can significantly increase the probability of profit to about 70%! However, not all setups can be interpreted this way; if it’s a deceptive signal, referring to this will be meaningless.

For example, in May 2022, when LUNA plummeted from $80 to $0.0001, a trap was formed. On May 9, the price dropped from $119 to $38, hitting the previous low support level (the September 2021 low of $35). The K-line showed a combination of 'hammer candlestick + bullish engulfing', and the MACD bottom divergence signal appeared, looking like a standard bottom-fishing signal. However, at that time, the UST stablecoin had already decoupled to $0.5, and the algorithmic mechanism caused LUNA's circulation to increase at a rate of millions of coins per second, instantly breaking the support level, leading to a 70% drop within 24 hours.