It can be clearly stated that the large-scale bullish trend is still present, but knowing is one thing, and identifying where we can speculate is the key. Today, let's discuss this topic.
1. Why do we say that the large-scale bullish trend still exists?
As shown in the figure, the trend I’m focusing on is from September 6 to the current market. From the chart, it can be seen that the highs and lows are clearly rising progressively. Friends who understand Dow Theory will know that when the highs and lows of the market continue to rise and the pullbacks do not break the previous low, it can be regarded as a bullish trend.
Attentive friends may notice that I have marked a price at 65486, which is our first point of interest for speculation. Let's move on to the next topic: observing and selecting speculative price areas.
2. Observe and choose speculative price areas.
Currently, I have personally observed several locations: 65500, 63300, 60000.
The basis for choosing 65500 is as follows.
1. The current daily level EMA55 is within this area.
2. It is the head area of the entire daily level structure. Pulling back to this point is exactly when the market forms a pullback to the head after an uptrend to choose an entry point.
Little Cheese: A 'sighting trade' refers to the trading method at the previous head position after a breakout in the market, indicating that the market is testing whether the breakout is valid.
3. It is also the middle track of the 4-hour Vegas channel 288, 388 channel group.
4. In historical price movements, it belongs to key levels, as shown in the figure.
There have been three examples of price pauses followed by reversals.
After breaking through on October 15, there was a retest on October 23, confirming its validity and turning into support, i.e., a support-resistance swap.
5. Potential testing price channel of the current trend.
As shown, from September 6 to the present, the market has formed an upward channel pattern. Based on this channel, the next contact point may be at 65425. However, considering the time frame, it will come around November 12, which is a bit far, so we shouldn't pay too much attention to this price channel but judge based on the actual market trend.
From this perspective, there are multiple support effects at this position, making it a very worthy point of attention. This is also the place I personally find most worth speculating on, for the reasons mentioned above. Other places like 63300 and 60000 do not have this strong support resonance.
The basis for choosing 63300 is as follows.
1. At the fast track of the daily level Vegas channel.
2. There have been previous pause-reversal areas in historical trends, which can be considered potential support areas, but such support is often weak and easily broken.
Little Cheese: The criteria for judging the strength of key levels like support and resistance are as follows.
1. The frequency of pauses and reversals; the more, the better and stronger.
2. Whether it is a support-resistance swap, i.e., a price area that has been both support and resistance.
Attentive friends might observe that on October 7, it rose so high; can this still be considered valid?
This type of market behavior can be defined as a false breakout. Such situations occur when the trader's actions contradict the overall market trend. Simply put, some large players believe that a breakout will happen here and invest heavily, but the overall market trend does not support this, resulting in a spike.
3. At the weekly level EMA21.
The reasoning for the price area of 63300 is as follows, and it can be clearly seen in comparison to 65500 that the basis for observation and utilization has significantly decreased, indicating that this position is relatively weak and prone to being broken, but it still requires attention. One should have a sense of awe towards the market; everything must be determined by market trends regarding its validity and whether it has broken through.
Basis for choosing 66000.
1. At the middle track of the daily Vegas channel.
2. This price area has previously experienced three price pauses followed by reversals in historical trends and has served both as resistance and support, making it a valid key level.
Similarly, October 10 can be defined as a false breakdown.
3. The key reversal point of the entire upward trend.
According to the definition of Dow Theory, when an upward trend breaks the previous low and creates a new low, it is considered the end of the entire trend and reverses into a downward trend. As shown, 58900 is the previous low point in this segment, i.e., the reversal point.
Let's think inversely; if the market does not end the upward trend at this reversal point, can we not choose to speculate here? Trading is a game of probabilities; we should choose positions that align with the market direction, leaving the rest to market trends. We do our best and accept our fate.
Some friends may ask, there's still over a thousand points to 60000, how do I enter?
On October 10, the closing did not settle below the key level, whether on the daily or 4-hour chart. Similarly, if the subsequent market returns below 60000, we must pay close attention to see if it directly breaks down. Conversely, if it does not break the previous level, we can trade around this area, setting a stop loss just below 58900 and waiting for a 15-minute reversal golden K to enter.
Good! We've covered the situations at three positions. Next, we just wait for the market to give us answers. Stay calm in a restless market, be patient, and believe that the market will not let you down. Wish everyone happy trading.
I am Xing Zhou, see you next time~~~
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