The process from Rule 1 to Rule 8,
Just like Tai Chi Bagua, it goes round and round in a cycle!
(I) Rule 1: When the moving average gradually flattens out from a downward trend and slightly rises upward, and the price of the currency breaks through from the downward trend, it is a buy signal.
1. The buying point suggested by Rule 1 is actually to follow the trend.
2. When the moving average and the coin price turn from a falling trend to a flat and upward trend, the technical environment for going long is basically in place, and this is a good time to buy.
(II) Rule 2: When the currency price is above the moving average and does not fall below the moving average during a pullback, it is a good time to buy when it rises again.
1. The moving average can provide necessary support when the price falls, at least proving that the current trend has not changed.
2. During the rising process, price fluctuations are inevitable and normal. After all, only a few prices will rise suddenly and complete the whole market in one breath.
3. The currency price did not fall below the moving average during the fluctuation and rose again. This is not only a manifestation of a benign decline and adjustment, but also shows the long strength of the currency price itself.
(III) Rule 3: When the price of a currency is above the moving average and falls below the moving average during a correction, but the moving average continues to rise, this is the time to buy.
1. If Rule 2 is a strong pullback, then Rule 3 is a pullback type that deliberately creates panic. This type of pullback deliberately falls below the moving average, intending to trigger panic selling by technical analysts.
2. An upward moving average, and the price rises again if it does not break after a decline. This reflects the strength of the currency price on the one hand, and the stable support of the moving average on the other.
3. Is there any support for the broken moving average?
The key point of analyzing the moving average is not whether it is broken or not, but whether the moving average can have a support or suppression transformation relationship.
(1) When the price falls below the moving average, it does not necessarily mean that support no longer exists.
(2) The price of the currency breaks the moving average, but quickly returns to above the moving average. The moving average does not suppress the price of the currency, which means that support still exists.
(IV) Rule 4: When the price of a currency is below the moving average and suddenly plummets, it is too far away from the moving average and is very likely to approach the moving average. This is the time to buy.
1. The focus of this rule is the deviation rate between the currency price and the moving average. In an uptrend, the price plummets in a short period of time, causing it to be far away from the average cost line, making holders more reluctant to sell. At the same time, a further drop in the price will also attract the attention of bargain hunting funds, and a rebound will often germinate from this.
2. The price fell rapidly, resulting in an increase in the negative deviation from the moving average, and then the price rebounded.
3. Because the rebound of the currency price may only be to repair the excessive deviation, it is very likely to continue to fall after completing the task. Different technical environments will inevitably lead to different trading expectations, which must be noted.
(V) Rule 5: When the price is above the moving average and has been rising for several consecutive days, moving further and further away from the moving average, it means that holders have made huge profits in the recent period and there may be selling pressure for profit-taking at any time, which is a sell signal.
1. Anything that overperforms in a single direction may cause a reversal, and the same is true for prices. Rule 4 is a negative deviation caused by a short-term excessive decline in the price of the currency, while Rule 5 is a positive deviation caused by a short-term excessive rise in the price of the currency.
2. The price soared in the short term and moved away from the average cost line. The deviation indicator below also rose sharply, and the price then turned to fall.
3. If the price significantly escapes from the moving average, the short-term profits of holders will inevitably increase rapidly, which is likely to induce the desire to cash out, leading to a decline in the currency price.
(VI) Rule 6: When the moving average gradually flattens from rising, and the price of the currency falls below the moving average from the upward direction, it indicates that the selling pressure is gradually increasing, which is a sell signal.
1. Rule 6 actually describes the downward trend. When the average cost is tilted downward, the price breaks through the moving average from above, strengthening the downward trend. When this broken moving average shows a strong suppression of the currency price, selling or shorting is the best choice.
(VII) Rule 7: When the moving average and the coin price are in a downward trend, the coin price rebounds and rises above the moving average, while the moving average continues to decline, which is a short signal.
1. In the process of a clear downward trend, there are multiple levels of rebounds in price, including the stronger secondary rebound mentioned in Dow Theory and the short-term rebound with a shorter running time. The secondary rebound belongs to the level that can be moderately participated in the staged long position, while the short-term rebound is only suitable for short-term traders. For most traders, both are opportunities to sell short positions or take the opportunity to short.
2. In a downward trend, most price rebounds will stop above or below some cost lines where intensive transactions have occurred.
(1) Technically, when the coin price approaches the cost line, some holders who are troubled by the downward trend and find it difficult to escape will seize this rare opportunity to reduce their positions, causing the coin price to be under pressure and stop rising.
(2) When the price of a currency is blocked from rebounding, those who originally held positions and waited for the upward trend to develop will give up waiting and join the team of reducing their positions, and the price will be suppressed more and more seriously. The downward moving average cannot provide the necessary support, so the rebound ends.
3. In other words, if the price of the currency can withstand the pressure under this situation, then we can expect a rebound or even a reversal in the price of the currency.
(VIII) Rule 8: When the price of a currency is below the moving average and fails to break through the moving average during a rebound, it is time to sell when the price of the currency falls again.
1. This is a weaker rebound pattern than Rule 7, and it is also a common phenomenon when the short-term fluctuation of the currency price encounters trend pressure.
2. In actual combat, the moving average is the barrier, and the inability of the price to break through this barrier strongly means that the bulls are still in a state of scattered troops, and it is far from the time to gather, assemble, and consolidate attack power.
3. The currency price and the moving average go down simultaneously. After a period of decline, as the negative deviation increases, the price rebounds weakly to repair the excessive deviation, and then retreats again after touching the upper moving average.
4. This form of rebound has no value for most traders to participate in, because it is difficult to grasp the fleeting best buying point. After missing the best buying point, if you chase high and buy strongly, either there is a lack of profit space or you will be trapped as soon as you buy.
For holders of positions, when this kind of rebound occurs, it is a good opportunity to reduce their positions. When the currency price touches the moving average and is difficult to truly break through, and the price turns to fall again, you should seize the opportunity to exit and not have too many illusions.
If you are still trapped and losing money in this market, please deduct 333 from the comment area.
