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PHASE 1: “INNOCENT AND INNOCENT”
This is the first step when you get into trading. You know trading is a good way to make money, because you have heard a lot about it and about millionaires… Unfortunately, just like when you first started driving, you think it is easy – after all, you realize how hard it is… Markets go up and down… what is the secret – find out! Unfortunately, just like when you first got behind the wheel, you quickly realize that you have no skill at all. You trade too much and risk too much. When you open a position and it goes against you, you jump out and open another position opposite, and it goes against you… and so on and so forth… You may have some initial success, which is actually quite bad because it tells your subconscious “oh, trading is easy” and you start risking more. You want to make back what you lost and start “doubling” every time you trade. Sometimes you win, but more often than not you are bruised and hurt, losing big. You forget that you have no trading skills. This phase usually lasts a few weeks, and the market often changes quickly and you are sucked into phase 2.

Foreword
I am someone who has learned a lot from AI - chatGPT, by asking a lot of questions, with different perspectives. In the trading market, I have always stood on the side of traders to ask chatGPT, many things related to technical analysis, indicators, psychology, risk control... But today, I put myself on the other side, the other side, which is the Big Boys, the big organizations, the big banks that control the market, control the game to see how they act in trading. The things I ask AI below are things I have read in many books and contemplated the market for nearly 10 years, and therefore I can evaluate AI's answers at a level that is very true to what I perceive. It's just that I cannot synthesize as fully and concisely as AI, because AI's level at this point is really much better than humans like me. My questions and chatGPT's answers will penetrate the essence of trading. And it will be really useful for traders who are really serious about the profession. The article is very long, please be patient and follow below. Thank you very much!

A trading framework is essentially a structured set of guidelines, principles, and methodologies that you consistently follow to approach the market. It acts like your roadmap to navigate trading decisions while maintaining discipline and objectivity.
Here’s how the points align to form a robust trading framework:
Core Components of a Trading Framework
1. Market Analysis Framework
Direction (Trend): Determine the market’s current trend (uptrend, downtrend, or sideways).Momentum: Evaluate the strength or weakness of the trend.Volatility: Identify whether the market is in high or low volatility to adjust your strategy (e.g., breakout vs. range trading).
2. Technical Analysis Framework
Indicators: Use tools like Moving Averages, RSI, Bollinger Bands, ATR, or MACD to confirm setups.Key Levels: Always mark support and resistance zones for potential reactions.Multi-Timeframe Analysis: Analyze the higher timeframes (e.g., H4/D1) for trend context and lower timeframes (e.g., H1/M15) for precise entry/exit points.
3. Risk Management Framework
Position sizing (based on ATR, volatility, or percentage of account).Setting stop-losses and take-profit levels using technical levels.Always follow the risk/reward ratio principle (e.g., 1:2 or better).
4. Trade Execution Framework
Identify entry signals (e.g., candlestick patterns, trendline breakouts).Define exit strategies:Take partial profits at intermediate targets.Trail stops when price moves in your favor.Avoid entering trades during unpredictable events (e.g., news releases).
5. Sentiment and Correlation Framework
Pay attention to broader market sentiment (e.g., risk-on/risk-off environments).Correlations between assets (e.g., Gold/USD or indices and currencies).
6. Routine and Preparation
Pre-market preparation: Analyze the market trend, key levels, and upcoming economic events.Post-trade analysis: Review your trades to identify areas for improvement.Maintain a trading journal to track performance and refine your system.
7. Emotional and Psychological Framework
Stick to the plan: Discipline ensures you avoid chasing trades or overtrading.Accept losses gracefully: Losses are part of trading—manage them like a professional.Avoid impulsive decisions by taking breaks or stepping away after a streak of wins/losses.
Why Call It a Framework?
A framework provides:
Structure: Ensures consistency across all trades.Flexibility: Adapts to changing market conditions while maintaining core principles.Discipline: Reduces emotional decision-making by following a predefined process.
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1. Current Consolidation Zone
The price is consolidating near the major resistance level (~137.22), indicating hesitation from both buyers and sellers.This consolidation forms a rectangle pattern, a typical signal of indecision in the market.Key levels to watch:Resistance at ~137.22.Support around ~110-115 (lower bound of the consolidation range).
2. Historical Resistance at 137.22
This level has been tested multiple times over the past years and continues to act as a psychological barrier.Previous attempts to break above this level (e.g., in 2021 and endly 2024) resulted in rejections and strong sell-offs.If the price successfully breaks above 137.22, the next likely target will be ~160-180, followed by ~200+.
3. Volume Analysis
Volume Insight: The recent rally into the 137.22 resistance zone was accompanied by a rise in volume, signaling buyer interest.However, during the consolidation phase, volume has been tapering off, which is typical before a major breakout or breakdown.Watch for a volume surge as an early indicator of the next big move.
4. RSI (Relative Strength Index)
The RSI is currently in bullish territory (~62) but has not yet entered the overbought zone.The RSI momentum suggests that buyers are still in control, though a slight cooling-off can be observed.A break above 137.22 could push RSI into overbought territory, confirming further upside momentum.
5. Potential Outcomes
Bullish Scenario
Breakout above 137.22:
This would indicate that buyers have regained control, confirming a continuation of the uptrend.Targets:First target: ~160-180.Second target: ~200-220.A surge in volume is critical to validate this breakout.
Bearish Scenario
Breakdown below the lower consolidation support (~110):
This would suggest sellers are dominating, and the price could retrace to ~80-100, which is a significant historical support zone.Volume on the breakdown will be an essential confirmation.
Trading Plan
For Bullish Bias:
Wait for a clean break and close above 137.22 on the weekly chart, accompanied by high volume.Place stop-loss slightly below 137.22 to protect against a false breakout.
For Bearish Bias:
Wait for a break and close below 110, confirming a downside move.Stop-loss can be placed just above the lower consolidation box (~115).
Neutral Stance:
If the price remains in the current range, avoid trading to minimize exposure to sideways movement.
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