1. Law of Elasticity
The cryptocurrency market has significant daily volatility due to its inherent characteristics. In a downturn, the market falls like a bouncing ball; the sharper the drop, the faster the rebound; the deeper the fall, the higher the rebound. Rebounds during a slow decline often lack strength and participation value, leaving little operational space; however, the retaliatory rebounds during a crash and rebounds from oversold conditions have good profit potential, thus offering certain participation value and operability.
2. Law of Timing
Patience is needed when waiting for buying opportunities, but selling opportunities should not be delayed. The strategy for catching rebounds differs from that in a rising market. In a rising market, one generally waits until the rise ends, and the price has stopped rising and begins to pull back before selling. However, in a rebound market, one should not wait until the rise is about to end to sell. In rebound operations, it is crucial to emphasize early selling; generally, one should decisively take profits after realizing some gains. If, for some reason, profits have not yet been realized, and the market's rebound is about to reach its theoretical target, one should also sell decisively. The duration and upward space of a rebound trend are limited; if one waits until a phase peak is confirmed before selling, it is usually too late.
3. Law of Decision-Making
Investment decisions should be primarily based on strategy, with predictions as a secondary consideration. The trend development of a rebound market is often not obvious, and the variables in market development are significant, making predictions difficult. Thus, when participating in a rebound market, one should prioritize strategy and supplement it with predictions. When investment strategies and predictions conflict, decisions should be made based on the strategy rather than relying on predicted outcomes.
4. Law of Conversion
A rebound does not necessarily evolve into a reversal, but a reversal must evolve from a rebound. However, in a downtrend, only one of the rebounds can convert into a reversal; the remaining multiple rebounds will trigger larger declines. Traders who rush to catch a rebound for a chance at a reversal often find themselves trapped halfway up the mountain, so one must not blindly assume that a rebound trend is a reversal trend to act on.
5. Law of Pullback
Relative to the law of elasticity, in an uptrend, the market rises like a parabola. Any increase cannot occur as a continuous surge. Once the market reaches a peak in a phase, it will inevitably face a pullback adjustment. Generally, the faster and higher the rise, the quicker and deeper the pullback; if the rise is slow and fluctuating, the pullback will usually be very small. Therefore, the more explosive the breakout rise, the higher the success rate of anticipating a pullback.
