As the market fluctuates downward and market sentiment is depressed, a study notes column is added.
Learn Wyckoff's Three Basic Laws
1. The Law of Supply and Demand
“When demand exceeds supply, prices will rise in order to meet such demand; conversely, when supply exceeds demand, prices will fall so that the excess supply can be absorbed.”
Interpretation: If supply is less than demand, the price will rise; if supply is greater than demand, the price will fall. The first important reason why Bitcoin prices are bullish in the long term is that the upper limit of supply is stuck and the supply is limited; the second important reason is that the public has gradually discovered and recognized the value of Bitcoin, which has led to increasing demand. Changes in demand are complex and are affected by various factors in the short term. For example, when there is good news, the price increases and the volume increases, and when there is bad news, the price drops and the volume increases, but the excess supply will be absorbed, because as the price falls, the demand increases. For example, when a bottle of water costs 100 yuan, you will not buy it, but when it drops to 0.1 yuan, you will buy a few more bottles. Therefore, for the subject matter with consensus, even if there is a short-term excess supply, it will eventually be absorbed. But it is difficult to say for the subject matter without consensus. Many copycat coins in the currency circle have also been glorious for a while, but because their value has not been recognized by the market, they eventually disappeared. Therefore, whether the excess supply will be attracted depends on the value of the subject matter.
2. The Law of Cause and Effect
"For everything to have an effect, there must first be a cause, and the cause and effect are in direct proportion. In other words, a small change in volume will cause a small price fluctuation. If there is a big cause, there will often be a big effect. If the cause is relatively small, it will also produce a small effect."
Interpretation: The law of cause and effect is rather obscure. To put it in simple terms, it is: the longer the horizontal line is, the higher the vertical line is. If it is horizontal, it will fluctuate. If it is vertical, it may be upward or downward. If it is upward, the horizontal line is for accumulation, and if it is downward, the horizontal line is for distribution. The longer the consolidation and oscillation lasts, the greater the accumulated or consumed power will be, and the greater the subsequent rise or fall will be.
Wyckoff theory has accumulation model and distribution model to help determine cause and effect.
Although causes lead to results, more often than not, it is only after seeing the results that we understand the previous causes. This is the complexity of the market and the complexity of trading.
3. Input-Output Law
“For every action, there is an equal and opposite force. In other words, price movements on the chart will be reflected in volume movements below.”
Interpretation: This law is also obscure. In simple terms, price changes are inevitably reflected in trading volume, and price changes can be confirmed by changes in trading volume. For example: price increases and volume increases, price increases and trading volume increases are benign and healthy. If the price increases but the volume is small, be careful of being tempted to buy more. If the price does not increase much, but the trading volume increases, this may be due to selling pressure.
When the market breaks through a key pressure level, it is necessary to observe whether the trading volume increases to prevent a false breakthrough.
The trading volume also involves the relationship between no volume, low volume, double volume, high volume, shrinking volume, and tiered volume and price, which is quite complicated.
We can talk about the offensive and defensive strategies under high volume columns later. #技术分析
