Cryptocurrency Exchange - Kiss, MACD, Divergence, Central Zone

The so-called “kiss” is related to the moving average system, which is simply a mathematical treatment of price trends. In essence, it cannot be separated from probability, which is completely different from the concepts of central zones and other ideas mentioned later. Therefore, it is essential to understand clearly and not confuse the moving average system with the central zone. The moving average system is fundamentally the same as indicators like MACD; it is only a supplementary tool. Because these tools are relatively straightforward and easy to grasp, those who do not want to study them in depth can first understand these basics.

However, “learning is never enough.” If one cannot thoroughly investigate the matter, the ultimate concern is always “fear of missing out.” Therefore, it is crucial to understand the central zone and other concepts clearly. MACD, as an auxiliary system, is still very useful. The sensitivity of MACD depends on its parameters, usually set to 12, 26, and 9, which are sufficient for general trends. But for very rapid movements, the reaction on a 1-minute chart is too slow(. Note: The maximum value of MACD histogram length used to measure the fastest movements. If engaging in ultra-short-term trading, one must look at actual trends, such as the 600779 1-minute chart, where the move from 16.5 to 19 clearly represents a continuous upward extension in 1 minute. How to grasp the ultra-short selling points in such trends? It’s not hard to find that the lengthening of MACD bars is related to divergence, roughly reflecting the deviation between the trend and the moving averages. When opening a MACD chart, first be very sensitive to the typical height of MACD extension for that stock. During consolidation, MACD usually extends to a certain height and then reverses. In a trend, this height is a high point, which has a limit. Generally, once this divergence limit is reached—especially after two or three attempts to push beyond it—a correction triggered by divergence will occur. Because this correction happens too quickly, it cannot be reflected in the 1-minute chart’s divergence, so it must be judged solely by the lengthening of MACD bars. Note that this judgment assumes a rapid rise on the 1-minute chart; in other cases, it should be combined with the movement of the yellow and white lines. From this 1-minute trend, the height of the bars at 17.5 yuan is a benchmark. During subsequent pushes to 18.5 and 19 yuan, the lengthening of bars cannot surpass this height. Although the area formed is larger than before, the inability to break through after two attempts at divergence limits indicates that this aggressive trend should pause.

Another situation is when a stock continuously hits the limit-up in one word. Due to the design weakness of MACD, on 1-minute or even 5-minute charts, wave-like oscillations similar to sine waves may appear. In this case, divergence analysis is not suitable. The simplest approach is to look at the central zone on the 1-minute chart; as long as the central zone keeps moving upward, it can be ignored. When the central zone stops rising, it indicates a larger adjustment phase, and then one can judge whether this adjustment is worth participating in based on higher-level trends. If using MACD for judgment, look at a longer timeframe, such as 30 minutes. Generally, in such trends, the red bars will show a pattern where the lows of the red bars keep getting lower, eventually touching or slightly breaking below zero, then red bars extend again. This is a warning signal. If at this point, the larger timeframe also encounters resistance and the limit-up cannot be sustained, a significant shakeout is natural. For example, stock 600385 hit the limit-up at 2.92 yuan, with MACD showing a small green bar, then continued limit-up, with red bars extending again. But at 3.28 yuan, the previous high on the daily chart, the 3.22 limit-up was not sustained, leading to a sharp shakeout.

Note that if such consecutive limit-ups occur during the initial upward phase, even after the limit-up is broken and the shakeout ends, forming a certain level of central zone, there is often a new upward move. Only when a divergence appears on a higher level can it constitute a true correction. From a medium-term perspective, the ultra-short-term strategies mentioned above are not very significant; if you have the ability, play; if not, forget it. The key is to grasp the larger correction and avoid participating in the smaller fluctuations—that is the most critical point.

Additionally, it is essential to distinguish clearly between trends and consolidations, and then understand divergence and divergence within consolidations. There are three situations in consolidation divergence, especially the third type of buy point formation, which must be understood thoroughly.

Note that divergence during consolidation does not necessarily mean a large decline; otherwise, how could a third type of buy point form?

In a trend, divergence must at least retrace to the B segment, which allows pre-knowledge of the minimum decline. The strength of divergence’s retracement is highly related to its level. If on the daily chart, during the early part of an upward move, MACD hits a new high with strong extension of the red bars, then even if divergence appears on the 5-minute chart, the downward move is limited, and only short-term profit-taking is needed, or it can be ignored. Conversely, in the final stage of a daily trend, especially during the extension of the upward move, a 1-minute divergence can trigger a sharp decline. Therefore, multi-level analysis is necessary; one cannot simply sell after seeing divergence expecting a 50% drop. Such a scenario is unrealistic.

Generally, a standard two-central zone upward trend will show this pattern on MACD: the first phase, where the yellow and white lines cross above the 0 axis from below, stay above the 0 axis, forming the first central zone and a second buy point. Then, breaking through this zone, MACD’s yellow and white lines quickly rise, often representing the most powerful segment. During this period, trend extensions and the so-called indicator dulling caused by MACD’s oscillations often occur. This phase usually ends with a secondary divergence, leading to the formation of the second central zone. Meanwhile, MACD’s yellow and white lines gradually return near the 0 axis. Finally, the trend continues to break through the second zone, with MACD’s lines and histogram repeating the previous process. However, this time, the yellow and white lines cannot reach new highs, or the histogram’s area or height cannot surpass previous highs (note: 1. yellow and white lines, 2. histogram area, 3. histogram height). When divergence appears, the upward process of these two central zones ends. Understanding this principle allows most stocks’ past and future to be predicted early. **$STO **