How to tell whether a coin is strong or not, the potential wealth code
First of all, the strength of the outbreak needs to be combined with the fundamentals. For example, we all know that a bunch of altcoins will rise, but which one will rise the most powerfully? I think we need to check it in combination with the fundamental on-chain data. We have talked about this issue internally, so I won’t talk about it here.
So apart from this kind of news and on-chain data, how can we find this through technical analysis? Today I will share two bottom-picking methods that I personally use.
The first type: a relatively large central divergence
Please see the schematic diagram
What is the end of the central divergence with a large difference? Let's use the above case diagram to illustrate.
First, the price moves out of section A, passes through the center, and then moves out of section B. The gap between section A and section B is quite large.
This is also called a complex adjustment in price behavior. After a complex adjustment, the price should have moved out of the equal distance of leg 2, but it did not. This is a sign of power exhaustion.
The above is just a schematic diagram, let’s take an example.
Look at the picture. Section A is a very long trend. After experiencing the central adjustment, it becomes weak and exhausted when entering section B. The trends of sections A and B are very different. Section B may be only one-fifth of section A. This is a very good trend. The appearance of a bottom structure is our opportunity to buy at the bottom.
Then the next second type: the trend divergence ends
The trend is 2 centers with 3 segments, which is the 5-wave model of the wave theory.
The winning rate of this type is higher than that of the first type. This type cannot fall any lower.
Let's take a case to illustrate:
Looking at the case below, according to the price above, there are 2 central and 3-segment trends. It is obvious that there is a difference between the third segment and the upper 2 segments, which is the performance of the exhaustion of the short-selling force. After the exhaustion of the short-selling force, it is our position building area, which is also the best buying point.
No market can last more than 3 stages, why does the 5-wave model not have a bottom 6? It has fallen to the bottom.
The above are the two bottom-picking methods that I personally prefer. These two methods are mentioned in the Chaos Theory. You can practice more often and find price trends at the same level to review and summarize more often to master this skill.
The market is just starting now. Whether it is through news or technical aspects, we can seize opportunities when the market is good. At the same time, don’t forget to learn. Learning will become our weapon to make money.
I am Coach Panda, who is good at explaining complex issues in a simpler way. See you next time.
