1. Time Dimension: Timing and rhythm of market decline

  1. Consolidation and Top Area:

    • Top Area: The main capital usually begins to "distribute" gradually when prices approach historical highs. At this point, the market may enter a long period of consolidation, often accompanied by decreasing volume. The main capital uses repeated ups and downs in this area to wash out weak hands and distribute shares, attracting retail investors to step in. Generally, this stage lasts longer and continues without a clear trend, leading most investors to believe the market has not peaked, which creates fear among retail investors.

    • Periodic High Points: The main capital usually pushes prices to critical points at important time nodes (such as quarter-end, year-end, economic data releases, etc.) to create short-term market panic and distribute shares. At this time, retail investors often "do not understand" and believe that the market will continue to rise, allowing the main capital to smoothly sell stocks or cryptocurrencies at high prices.

  2. Initiation and Acceleration of Decline:

    • Time Compression: When the market rises, the main capital often pushes prices up slowly, while the time during a decline is shorter and faster. The beginning of a decline usually occurs when the main capital quickly suppresses prices through sudden negative news, black swan events, macroeconomic data, etc., creating panic. A "waterfall" decline occurs when the market drops sharply over a short period.

  3. Bottom Area:

    • When the market declines to a certain stage, the main capital begins to show "stop-loss signals." At this stage, the main capital often starts to accumulate shares at low prices, and the speed of price decline slows down, making the time feel longer. This stage is often accompanied by low-volume fluctuations, and market sentiment begins to gradually recover. The main capital prepares for the next round of increases through a long period of low-level accumulation.

2. Volume Dimension: Changes in market supply and demand and capital flow

  1. Volume during the Initial Stage of Decline:

    • In the initial stage of decline, trading volume is usually large, indicating a significant amount of selling pressure in the market. The peak of volume at this time is often the concentrated outbreak period of market panic, where the main capital forms a round of panic selling through increased volume declines. Retail investors may incur significant losses at this time, while the main capital takes the opportunity to accumulate cheap shares. During this stage, market sentiment will be particularly low, and many investors begin to question the market's trajectory, generating emotions of cutting losses.

  2. Volume Shrinkage:

    • As the market gradually approaches the bottom, trading volume often shrinks. This is because most retail investors have already panic-sold during the decline, and the buying and selling forces in the market tend to balance. At this time, the main capital accumulates at low levels, and volume usually shrinks, but this is also a precursor to a reversal. The shrinkage of volume means that selling pressure in the market is lightening, and it begins to enter a consolidation phase. If combined with some favorable news or economic data at this time, prices may gradually rebound.

  3. Volume confirmation during rebound:

    • If the price rebounds with a gradual increase in volume, it indicates strong buying support in the market, and the rebound is likely to become a trend reversal rather than a false breakout. Therefore, investors need to pay attention to the changes in volume during the rebound process. If the volume is insufficient during the rebound, it means market demand is weak, and the price increase may only be a temporary correction, with the possibility of another decline at any time.

3. Price Dimension: Judging the real trend of market prices

  1. Changes in price trend:

    • During the upward phase, prices gradually reach new highs, and market bullish sentiment rises. The price increase drives capital inflow into the market, forming a strong upward trend. During the rise, the main capital controls the pace to avoid a rapid increase. In the downward phase, prices will first break through important support levels, especially at critical technical support, moving averages, or historical price support positions. The main capital triggers panic selling by breaking through key support levels, causing prices to accelerate downward.

  2. False breakouts after a breakout:

    • During the downward process, the main capital sometimes creates false breakouts. After the price breaks through key support levels, it does not receive volume support, or prices quickly rebound in the short term. At this point, the main capital often creates false breakouts to mislead the market into thinking it has entered a bear market, enticing more investors to cut losses while the main capital takes the opportunity to accumulate bottom shares.

  3. Important support and resistance levels:

    • During the market's downward process, investors need to pay special attention to important technical support and resistance levels. The main capital will conduct carefully designed operations near critical positions. If the price breaks through key support levels and declines with increased volume, it indicates strong short-selling power in the market, and prices may continue to decline. Conversely, if the price stabilizes near support levels and volume decreases, the main capital may take the opportunity to counterattack, increasing the chances of a reversal.

4. How to Determine When to Sell at the Top and Buy at the Bottom

  1. Timing for Selling at the Top:

    • The key to selling at the top is "increased volume, slowed price increase." When the market encounters unclear economic data, policy changes, or enters an overly optimistic phase, the price increase begins to slow, but trading volume remains high, indicating that the main capital is quickly distributing shares. At this time, investors should decisively choose to sell to avoid being caught by the main capital.

    • Another way to sell at the top is to wait for technical signals, such as price breaking through long-term support levels or showing obvious price divergence signals. Technical aspects often reflect market changes in advance.

  2. Timing for Buying at the Bottom:

    • The best timing for buying at the bottom is when the price has continuously fallen, and volume has significantly shrunk, with market panic reaching its peak. At this time, the main capital begins to accumulate shares, and although prices may not immediately reverse, one can gradually enter low-level positions.

    • When the price reaches long-term support levels and shows rebound signals, the opportunity for buying at the bottom is significant. It needs to be confirmed with volume to ensure that the rebound has support.