Imagine BTC price fluctuations as moving up and down in a 'box'.
For example, in the chart, the price is at 115000 (lower edge)
Repeatedly oscillating between 120000 (upper edge)
This is the 'box' ⚠️
When the price rises near the upper edge, it often encounters resistance and falls back.
When it drops near the lower edge, it often gets support and rebounds.
It's like being trapped by the upper and lower edges of the box.
(Every time it reaches the lower edge of the box, observe whether it's oversold or overbought comprehensively.) Be sure to identify true breakouts or false falls.
Typically, price will dig a pit upwards.
Jump down and then bounce back up.
Bounce up and then go down.
1️⃣ Situation of breaking the box and then rising.
Not trend destruction (false breakout): After the price falls below the lower edge, it quickly pulls back into the range. It's like the bottom of the box was supposed to hold the price, but it got 'broken through' and then bounced back, indicating that the support below is still there, and the bearish force in the market is not that strong. The previous breakdown was a 'false fall' action.
2️⃣ Key operation points: Don’t rush into a short position just because it broke down! Wait for the price to return inside the box and observe whether it can stabilize. If it can re-oscillate within the box, it is likely to continue the box rhythm, so buy low and sell high; if the rebound is weak, then consider the trend may weaken.
Note ⚠️ the situation of breaking the box and then falling below.
Trend is questionable (true breakout becomes false breakout): The price breaks above the upper edge, initially thought to start a new rising trend, but then falls back into the box. This is like trying to jump out of the box and failing, then falling back, indicating that there isn’t enough bullish force during the breakout, and the previous breakout was just a 'feint'.
Key operation points: Don't blindly chase highs. If you missed the entry during the breakout, don't make impulsive emotional trades after a breakdown. Wait and observe the price's performance within the range. If it continues to be weak, the upper edge of the range may turn from 'breakout target' to new resistance, and it may continue to oscillate within the range or even go down; if it can stabilize and attempt to break through again, then consider following the market direction.
Summary ⚠️
Don't rush to conclusions: whether it breaks down or breaks through and then comes back, observe first. Don't assume the trend is over just because it broke down, or think it will soar just because it broke through. The market often 'deceives' with line behavior.
Using the box as an anchor: the upper and lower edges of the box are important references. If the price is within the box, follow the oscillation logic of buying low and selling high; after a breakout or breakdown, check whether it can stabilize the new rhythm. If it doesn’t stabilize, revert back to the box logic.
Emphasize secondary confirmation: whether it breaks through or falls below, wait for the price to stabilize again (for example, oscillating for a few days at the new position, along with trading volume, etc.) before confirming the trend change. Don't be led by instant fluctuations, otherwise, you may easily suffer significant losses from 'chasing highs and selling lows'.
In simple terms, when trading in the box, don't be fooled by a single breakout/breakdown. Focus on the box boundaries and observe the price's performance after it 'struggles', follow the rhythm, and avoid the mistake of 'chasing after a breakout and running away after a breakdown'.
Remember, you enter based on technical logic, so don't look at fundamentals to exit.
Maintain consistency in your trading.
Of course, it's not just theory; it needs to combine practical operational elements and calculate risk-reward ratios.
