THE CLOSING THEORY (Explained)
The Reason Why Everyone, Except P-Circle, Got Into Wrong Shorts on $ETH Near Its $3700 Resistance.
It took me 2+ years to perfect this Theory, but I am sharing it here for FREE so you can avoid the wrong trades and focus more winning.
LET'S LEVEL UP TOGETHER!
Chart Explanation:
I have labeled Three Levels in different colors. Let's understand each Level one by one...
1. The Purple Line: Whenever there's a Close at this Line, the price will NOT reverse, at ANY Resistance in between regardless, until it reaches the next Maximum Level, which is...
2. The Green Line: Price is destined to reach this Line after a candle closes near The Purple Line. Though, there is one mid point in between too, acting as a checkpoint to evaluate strength continuation...
3. The Mid Point: It's the bare Minimum Level where the price touches after crossing The Purple Line.
Understood Levels? Moving on to our Practical Chart:
Here, I have pointed the arrows and numbered them at each point when the Close happened NEAR The Purple Line, and then Hit The Green Line Successfully. However I executed my Trades not AFTER the closes, but to get best Price for my Premium Members I take then in ANTICIPATION of future closes.. so that is where bias helps too.
See for yourself how each Purple Arrow starts, and then stops minimum directly at The Green Line.
However, if there's a Daily Close above The Purple Line, and the price hasn't reached The Green Line, then it has reached The Middle Point (Our Minimum Level). and then at later stage has still reached the End Target all times.
BONUS: How I found the LONG Entry using The Closing Theory...
First, the price dumped precisely near my Orange Support (we'll discuss it another time), then I used my BIAS, which is a fundamental thing to execute The Closing Theory, and anticipated that the next Close will be Near/Above The Purple Line.
As always, the bias was right, and we closed above The Purple Line.
Now I don't care if the whole world talks about Ethereum's horizontal or diagonal "$3700 Resistance", I won't even think of shorting or take profit on my longs bare minimum until Price reaches The Closing Theory's Green Line. Target, at whichever MUCH simpler angle it comes.
This is also what helps in Swing Trading i.e. help you with 'when' to take profits
Horizontal lines are my Favorite, but sometimes they get frontrun or fall short of target but using this technique can help with execution into continuation. Actually once you reach advanced level of practicing it, you'll realise that it helps with not just extension or continuation of Targets but also as another reliable technique of exploring Supports and Resistances. That, for some other time.
AND IT HAPPENED...
Not only did we reach The Green Line, but we also regained our Trendline.
I'll be optimistic now for higher continuation as I've informed on my Handles that finally this time we could also Surpass beyond the level, but see the goal of Closing Theory has served its purpose.
NOTE: Another ONE of The Many applications of this Theory is also to help you find "WHEN NOT" to trade i.e. Here we used the theory not necessarily to short this 3rd time BUT to use it as an extension of Targets for an ongoing Trade.
So you knew Absolutely whatever resistances whatsoever in between were not going to be Profit-taking point. Hence, answered this Confusion people often have of "How to know which support/resistance to execute."
Like any Other Technique, Closing Theory is not applicable all the time, It does not have as many limitations but there are MANY other variables that require over-time perfection sometimes even with trial and error. Such as, yes, The standard approach of finding S/R(s) also works, but this Technique explores its own way of finding where and how to mark a Support or resistance, which fragment to extract, finding the Common Candle Closing points on a pane, justifying r:r, avoiding wrong or faulty candle closes - I mean I have given you relatively easier examples, sometimes you have to switch through timeframes to find out which close was a DEVIATION and hence fake.
One of the nicest things about this technique is, it's based on Empirical Evidence, which helps you increase trust and confidence in your own observation as well.
Thank you, everyone who shared their charts & levels earlier in previous post. I love how most of you didn't short, and were aligned with my Bias.
I'll keep sharing such content for your learning.
MOST BLOOD LOYAL COMMUNITY EVER!
- šøš. š Trading Wisdom
