Five years ago, one early morning, I woke up to the red alert sounds in the exchange. In just three hours, my 6 million assets were completely liquidated, leaving nothing. I watched the negative numbers continuously jumping on my computer screen as if I was nailed to the cross of reality!
Finally, I have come to understand: the cryptocurrency market is not a casino, but a battlefield. I borrowed 120,000 capital from friends everywhere, continuously summarizing failed cases, learning various trading techniques and strategies, and developed a trading method with a success rate of 90%. It took me 90 days to grow my capital to 20 million, which is truly not easy!
In addition to solid naked candlestick techniques, I also strictly follow these 10 ironclad rules:
1. Buy early when it falls, sell early when it rises: When you see a significant drop in price, there's no need to panic; this could be a good opportunity to enter. When the price rises significantly, be cautious of potential pullbacks and adjust your position accordingly. Grasping market fluctuations is key to achieving stable profits.
2. Fund allocation: Fund allocation is a key factor in determining profitability. Funds should be allocated reasonably based on your risk tolerance and market conditions. Pursue higher returns while ensuring safety.
3. Afternoon strategy: If the price continues to rise in the afternoon, do not blindly chase higher prices; try to avoid high positions. If a sharp decline occurs, first observe the market reaction, do not rush to bottom fish, and wait until the market stabilizes before making a decision.
4. Stay calm: Market fluctuations are intense, and emotional management is crucial. Do not panic when prices drop in the morning; take a break during sideways movement, and stay calm without being swayed by emotions.
5. Follow the trend: When the trend is unclear, don't rush to act. Don't sell when the price hasn't reached a new high, and don't buy when it hasn't retraced. Be patient and wait during sideways movement, and never enter lightly.
6. Yin-Yang line strategy: Choose bearish candles when buying, which is safer; wait for bullish candles to appear when selling to achieve higher returns.
7. Counter-trend thinking: Going with the trend is the conventional strategy, but at certain times, counter-trend operations can also bring opportunities. Dare to challenge market rules to gain more profits.
8. Be patient and wait for opportunities: When the price hovers in a high-low range, don’t rush to achieve results. Be patient and wait for the market to show a clear trend before taking action; this ensures more safety.
9. Risks after high-level consolidation: If the price suddenly rises after consolidating at a high level, be wary of the risk of a pullback. At this time, reducing positions or decisively exiting is an effective method to avoid being trapped.
10. Hammer Doji Warning: The hammer doji pattern indicates a market turning point. When encountering this pattern, stay alert, avoid over-leveraged operations, and controlling risk is the way to stability.
First, let's understand what naked candlestick technology is.
When entering the market, many friends like to refer to 'technical indicators' as a basis for buying and selling, such as MACD red-green bars, KDJ golden crosses and dead crosses, moving average support, etc.
Many friends even seek a 'holy grail indicator,' believing that owning it will allow them to make money effortlessly. However, you will never find such a 'holy grail indicator.'
In fact, almost all of these technical indicators are obtained by statistically processing historical market prices or trading volumes. Many times, you will find that price moves ahead of indicators, which usually have relative lag.
The price has risen significantly, and indicators have shown golden crosses, or the price has dropped significantly before a death cross appears, etc. These phenomena are the shortcomings of indicators.
Today we share this naked candlestick technique, which is the most direct reflection of market behavior (price) trading method, analyzing market behavior (price charts) through the structure of candlestick charts. #Binance Alpha new release.
In terms of price action trading methods, trading decisions are entirely based on market behavior (prices) itself, assessing future trends based on past price performance.
Therefore, under normal circumstances, we only analyze using candlestick charts. Thus, price action trading methods infer price trends through observing naked candlestick charts without relying on any other technical indicators.
Generally, in our eyes, the candlestick chart is the most expensive 'artwork' in the world. If you can understand the candlestick chart, then you can continuously gain wealth in this market. #ETH breaks 4600.
Next, I will teach you how to appreciate this 'artwork'!
First, the first step: we need to understand 'market structure.'
There is an old saying: 'Birds have their language, and beasts have their words.' The secondary trading market in the cryptocurrency world also has its language; the candlestick chart is the alphabet. If you can understand it, you can predict future market movements.
For the red and green bars on the naked candlestick chart, a recursive process can be established from single candlestick -> candlestick combination -> shape pattern -> market trend structure.
Let's first look at a single candlestick.
A single candlestick is composed of four prices: opening price, closing price, highest price, and lowest price. It represents the struggle between bulls and bears within a certain unit of time, ultimately distinguished by bearish and bullish bars (red and green bars). This basic knowledge will not be elaborated further here.
The size of a single candlestick represents different meanings. A large bullish candle, a medium bullish candle, and a small bullish candle all represent price increases, but the strength of bullish momentum decreases successively. A small bullish candle already indicates that the bullish and bearish forces are evenly matched, leading to a more anxious situation. #Mainstream coins are rotating upwards.
The same goes for large bearish candles, medium bearish candles, and small bearish candles.
Candlesticks with long shadows: shooting stars, hammers, inverted hammers, hanging men.
Their characteristics are: short bodies and long shadows; often the shadow is more than twice the body; the subordinate shadow or reverse shadow is very short.
In the first group of single candlestick patterns in the chart, regardless of whether they are bullish or bearish (red or green), a hammer appears at the bottom, and a hanging man appears at the top. In the second group of candlestick patterns, regardless of whether they are bullish or bearish, an inverted hammer appears at the bottom, and a shooting star appears at the top.
This type of candlestick represents the struggle between bulls and bears, and the appearance of such candlesticks is often a reversal signal. Of course, this single candlestick can also be combined with the preceding and following candlestick combinations to further confirm the effectiveness of the reversal signal, and the specific direction of price increase or decrease needs to be analyzed based on its position.
For example, a shooting star at the top indicates strong bearish intent and determination, suggesting a high probability of falling subsequently. In this case, it is basically advisable to short, which can effectively preserve value.
This is a shooting star top chart that appeared on ETH's 1-hour trend in mid-July this year.
This cyclical application generally has a cycle of 1 hour or more. The longer the cycle, the larger the reversal space will be. If it's at 1 minute or several minutes level, although the principle is the same, it is prone to false signals, and its timeliness will also be relatively short.
What is the principle behind this peak? Let's analyze it.
The upper shadow reflects the transition of bullish strength from strong to weak during this period. If the body closes bearish, it indicates that the bearish force fought back but ultimately closed down; if the body is bullish, it means that although the closing price is higher than the opening price, it still reflects the strengthening of the bearish force. It seems that the price is rising, but the trend it represents is likely to turn down.
At the same time, the longer this shadow is, the more intense the bearish competition becomes. When this candlestick pattern appears at a stage top, it indicates a high probability of price decline.
Of course, if this type of candlestick appears at the bottom, it is called an inverted hammer. If it is followed by a bullish candle, it indicates strong bullish commitment, and there is a high probability of a subsequent increase.
Looking at the second group, the hammer candlestick at the bottom indicates strong bullish commitment, and there is a high probability of subsequent increases.
Similarly, let's analyze its principle: a short body indicates that the opening price and closing price are close, and a long main shadow indicates that the price movement trend shows fierce competition between bulls and bears: the lower shadow reflects that during this process, the bearish force is transitioning from strong to weak, while the bullish force is gradually strengthening. Regardless of whether the candlestick body is bearish or bullish, a bullish body represents stronger bullish strength. However, even if it is a bearish body, it seems that the price is declining, but it actually indicates that the trend is likely to reverse upwards. The longer the shadow, the more intense the competition among bulls. When this appears at a stage bottom, it indicates a high probability of price rising.
But if this pattern appears at the top, it becomes a hanging man. If it is followed by a bearish candle, it indicates strong bearish commitment, and there is a high probability of a subsequent drop.
Other individual candlesticks, such as the doji and inverted doji, are similar to the hammer and shooting star, but their bullish or bearish signals are weaker than the latter.
The doji further represents a standoff between bulls and bears. It is essential to pay attention to the appearance of dojis at significant peaks and troughs, as this may indicate a forthcoming change in the situation.
For example, at the top, if the upper shadow of the doji is long, similar to a shooting star, it indicates a high probability of falling; if at the bottom, the lower shadow of the doji is long, it is similar to a hammer, indicating a high probability of rising.
Now let's take a look at candlestick combinations.
The double root candlestick combination has a piercing line and a weak signal of the dawn emerging. If it appears at the bottom, it is a strong bullish signal; correspondingly, if the piercing line and the dark cloud cover candlestick combination appear at the top, it is a strong bearish signal. Here, I won't elaborate too much.
The three candlestick combinations mainly include the morning star and evening star, with a candlestick representing the struggle between bulls and bears inserted between the two bearish or bullish candlestick patterns, such as the doji. This appearing at the top also represents a very strong bearish signal; appearing at the bottom also represents a very strong bullish signal.
Alright, the above points are relatively basic knowledge about candlesticks, giving everyone an understanding. Next, let's delve deeper into market structure.
A single candlestick or candlestick combination is not the most critical element for technical judgment; it is merely a very localized technical factor with limited practical operability. Generally, we cannot extract a single candlestick to make judgments about the entire market.
We need to enlarge our analysis to the overall market trend structure. When the overall and local structures resonate, its reference value will be very high!
For example, in a rising trend structure, if a long upper shadow shooting star candlestick appears in an important resistance area, it can basically indicate the end of this rise, also known as the single candlestick determining the trend or special candlestick at a special position.
We have already understood the local individual or multiple candlestick combinations, and now let's learn about the overall market trend structure. When we understand the language of the market, you will know 'which way the market wind is blowing.'
Market trend structure, simply put, involves connecting the peaks (high points) and troughs (low points) of price movements on the candlestick chart to form a curve that fluctuates up and down. This can help us judge market trends.
The market trend structure can generally be divided into three types: upward trend; downward trend; and consolidation trend.
We can judge trends through naked candlestick charts without relying on any technical indicators.
A market in a trend shows that if the price peaks (crest) keeps reaching new highs while the price troughs (valleys) also keep rising, then this is an upward trend.
Conversely, if the price low keeps reaching new lows while the price high continues to decline, then it is in a downtrend.
In such a one-sided trend, trading is relatively easy, and you can operate in the direction of the trend.
In an upward trend, the main focus is on going long. Your trading strategy is to buy low and not sell high, buying low during pullbacks, holding and not easily selling high. Only when a turning point appears is it time to sell high. Among all these local peaks during the upward journey, the real selling point is only the last time. This is buying low and not selling high until a turning point appears.
In a downtrend, shorting is the main focus, and the trading strategy is the same. Each time there is a rebound, you can add to short positions, which can be held until a turning point appears.
Another state of no trend is the consolidation trend, characterized by prices fluctuating up and down within a certain range. You will find that the price often touches a certain level and then reverses, maintaining a back-and-forth oscillating pattern within the range.
For a fluctuating trend, there will generally be an upper limit and a lower limit. Utilizing the strategy of selling high and buying low within the range is effective. Sell high or short at the upper edge of the fluctuation zone, and buy low or go long at the lower edge, until the fluctuation zone is broken and the trading strategy changes.
Through the previous explanations, we understand the overall market trend structure division and strategies, clarify the trading direction (long or short), and the key is how to identify the turning points in trends? This will change our trading strategies, which will be our focus next.
Once we understand the market trend structure, the next step is to find a suitable entry point (for short or long positions), as prices often reverse at that point.
You can visually identify obvious support or resistance levels on the naked candlestick chart; support levels are entry points for long positions, while resistance levels are entry points for short positions.
I will teach you the simplest method: just draw horizontal levels on the naked candlestick chart.
As we discussed earlier, candlesticks reflect the struggle between bulls and bears. Sellers represent the bearish force (holding the chips), while buyers represent the bullish force (holding cash). Therefore, the resistance during upward price movements comes from profit-taking selling and also from the selling pressure of trapped positions.
So where are the trapped positions?
Looking at the obvious peak positions, they basically represent areas of concentrated selling pressure. Once the price rises to that area, the selling pressure from trapped positions increases significantly, causing price declines. This is the reason for price drops.
For example, in the above image, we take the daily trend of ETH on July 14 as an example.
We draw a horizontal line at the position of the peaks, making it simple to judge that around 250 USDT is a strong resistance area. The subsequent few times reached this area, and the price showed a decline, which is caused by the selling pressure of previously trapped positions.
In the future, this position can only become a support level after breaking through.
Similarly, in a downtrend, find the obvious trough positions in the past; that is the cost level for bulls. Once the price retraces to this level, bulls will defend the cost level, leading to an increase in bullish strength and forming a price rebound.
For example, the BTC daily chart in the above image.
On the daily chart, we can see that several pullbacks around 8910 resulted in stop-loss rebounds. From the trough, we can draw a horizontal support line. If you want to participate in low-cost operations, just focus on this horizontal line, which can be analyzed visually through naked candlestick charts.
It is essential to note that support and resistance levels can switch. When a resistance level is broken, it will serve as support for future price retracements. Similarly, if a support level is breached, it will create pressure for future price rebounds.
Market trend structures are propelled in a wave-like manner. The main force will wash positions during the upward pull, resulting in price retracements. When the price retraces to the previous high, once that previous high is broken, it becomes support.
The simplest principle: if the main force has cleaned you out at a previous high, then the price will not return below your previous exit point, otherwise, the significance of washing out positions is lost. Therefore, a pullback to near the previous high is the best time for you to enter the market.
Let's look at the trend of ETH at that time, as shown in the chart.
In the chart, point A is a peak position. Once this peak is broken, it will turn into support.
Looking at the following adjustments, the lowest point at B in the chart basically stopped falling just above the price of A, and did not continue to plummet. After the main force has cleaned you out, subsequent adjustments will not give you a chance to enter at a lower price, so there is no need for further declines.
Similarly, the subsequent adjustment at point C also stopped falling just above the price of A.
Through the naked candlestick market trend structure, after understanding the price support and resistance levels, we can apply this to trading operations, combining special positions with special candlestick signals for comprehensive analysis, such as the reversal candlestick patterns we discussed earlier.
For example, at a low level (trough) strong support level, if a hammer candlestick reversal signal appears, this bottom signal is quite strong, and participating in long positions has a high probability of success.
As shown in the chart, BSV had a strong upward attack trend in early July.
On the 4-hour level, we can draw a horizontal line through the troughs, clearly analyzing the support level.
When a candlestick pattern appears at a support level, as shown in the circle in the chart, a hammer candlestick reversal pattern appears. At this time, participating in long positions will likely lead to significant gains.
Similarly, when we identify a resistance area through the peaks of naked candlesticks, if a reversal candlestick such as a shooting star appears at a critical position, then this position is a good short opportunity.
We will also take BSV as an example to interpret this, as shown in the chart above.
In the 1-hour level for BSV, drawing a horizontal line at the peak shows the resistance area.
At this special critical position, a shooting star appears, and two shooting stars consecutively appear, as shown in the circle in the chart.
This proves that the bearish power here is strong, and you can participate in short positions accordingly. You can grasp the subsequent downside space.
Of course, at special critical positions, analyzing through special reversal candlesticks is one method. You can also use trend lines, Fibonacci retracement, etc., which are all good analytical methods.
For contract trading, a complete trading system is crucial. Generally, this system will include: position, direction (long or short), entry point, profit-taking point (when to exit profit), stop-loss point (when to exit loss), countermeasures (emergencies), and risk control.
Through the naked candlestick techniques we discussed earlier, when combined with this trading system, we can ensure the success rate of each operation.
Generally, for opportunities with high uncertainty, it is better to keep the position control within 20%, avoiding heavy speculative trading. Of course, we pursue the success rate of each operation, so usually, we wait when there is uncertainty and only increase our position when we discover opportunities.
The myth of becoming rich may be distant, but those who master the rhythm can steadily pocket their profits. If you have ever lost, felt anxious, and been bruised in the market, you might as well try this rhythm.
Calm down and see the road clearly.
Stop when you need to, and act when you should.
Don't rush, take it slow.
Your path to doubling your investment may truly begin from that moment of mastering the rhythm.
Even the most diligent fisherman wouldn't go out to sea in a storm, but would carefully guard his boat. This storm will pass; a sunny day will come! Follow Lao Chen, and I will teach you to fish and how to fish; the doors of the cryptocurrency world are always open. Only by going with the trend can you have a life in sync with the rhythm. Save it and keep it in mind!
$ETH $BTC #九月加密市场能否突破？
