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Yesterday's market was extraordinarily lively, especially with the major asset in the South Korean market flashing a drop of 60,000, which was simply astonishing. As of now, I personally believe this wave of decline is more caused by panic in the South Korean political situation leading to local market sell-offs, coupled with issues with Upbit's system, and we cannot rule out the factor of chain liquidations.
What I need to reflect on is that behind this event lies a bigger question: Is the major asset a hedging asset or a risk asset?
From a purely price trend perspective, the major asset is obviously a risk asset; just look at the volatility, it’s like a roller coaster. However, don’t forget the global circulation ability of the major asset; this indeed gives it a risk-hedging attribute. After all, you can’t just exchange won for dollars freely around the world, can you?
But the reaction of the South Korean market is puzzling; why would investors choose to sell off the major asset first during political turmoil? Are they planning to exchange won for dollars?
Master Chen thinks that theoretically, the hedging ability of the cryptocurrency circle is stronger than that of traditional currencies. For instance, after the Russia-Ukraine conflict, the acceptance ability of the major asset and USDT far exceeds that of various national currencies. As for why South Korean investors choose to sell during crises, this is indeed difficult to understand.
Although I haven't figured this out yet, it is certain that this wave of 30% drop has triggered widespread panic and brought a chain reaction. It is precisely because of this that the market will rebound quickly. After all, investors are not used to such a sharp drop, and after panicking, they start to push back hard.
As for why the South Korean market dropped so sharply while the global market reacted less, there are actually several reasons: first, the difficulty of trading in Korean won pairs is higher than that of USD-denominated pairs. Secondly, this wave of collapse lasted only 13 minutes, unlike the previous continuous selling tide.
Furthermore, the trading volume in the South Korean market is relatively small, with limited influence. Of course, if this wave of flash drops occurred during the Asian trading session, it may not have been so small. Every time we talk about 'opportunity and risk coexisting', it truly comes true every time, vividly reenacting!
Let’s take a look at the recent trend of the major asset. Personally, I think this week resembles a special week of needle-like rebounds because the speeches of Federal Reserve officials have continuously stimulated market fluctuations.
The early drop on Monday can also be seen as the market taking the initiative. According to my previous analysis, the major asset will pull back to the 93800-94666 range, which is relatively stable so far and has not completely broken down.
In the 94000-94666 range, I have taken several wave-long positions, and when 93800 touched for the first time, it rebounded quickly. In the short term, below 93800 is a good support point, and low-buying is currently the most reasonable layout.
Unlike the situation of a one-sided decline, every support level's rebound is relatively strong now; the lower the pullback, the stronger the rebound. The short-term fluctuations are quite large, and if one does not take profits or stop losses in time, they may get stuck at a certain point. Those who did not take profits in batches in time may also easily be swallowed up by the rebound after the sharp drop.
For the medium term, it is difficult for the major asset to adjust to 85755 in one go because the support around 90,000 is quite strong. If the bears want to make a profit of 10,000 points from the medium to long term, the difficulty of the pattern and the challenge of mentality are no less easy than small wave operations.
Therefore, a low-buy strategy is still the most reasonable strategy in the current market; the game of risk and opportunity is still ongoing. Speaking of which, let’s not forget that today’s market is composed of previously cut investors; sometimes, not looking at the market but at the mentality is the great wisdom of trading.
Master Chen looks at trends:
Resistance level reference:
First resistance level: 96750
Second resistance level: 98000
Support level reference:
First support level: 95000
Second support level: 93700
Today's suggestion:
Despite the significant drop, the current rebound strength is quite strong. Therefore, from the perspective of yesterday’s decline, we can shift to a view of compensatory rebound.
The market’s buying interest remains active. Looking forward to retesting the high and re-entering the marked important upward channel. If the price falls below 94.7K~95K again, the downside risk will increase.
At this time, one should maintain the current position and gradually raise the bottom, paying attention to the trend of the 20-day moving average, and observing whether there is a resistance test for the upward channel. In today’s operations, the short-term view can still maintain a rebound perspective, but if the major asset fails to enter the upward channel, one should pay attention to the trading volume and shift to a short-term bearish view.
Entering the market during a sharp decline is not easy, so during a downturn, it is best to observe the charts, wait for a rebound signal, and only consider entering after confirming that the candlestick stabilizes above the moving average.
12.4 Master Chen's wave pre-burial:
Long entry reference: the range of 92800-93300-93550 can be lightly bought. If it pulls back to the 92450-91900 range, buy directly. Target: 95000-96750
Short-selling entry reference: not applicable
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