The recursion of the Chan Theory, simply put, is: starting from the smallest price structure, using a fixed set of rules, build larger trend structures from the bottom up step by step.

1. Core Essence

- Direction: Bottom-up (small to large)
- Principle: Isomorphism / Self-similarity — the structure rules are exactly the same at any level
- Purpose: To establish an unambiguous level system and solve the problem of “how large is the trend level, and what stage is it currently in”

2. The two key functions of recursion (original text)

1. f0: Foundation (constructing the smallest level) - starting from K-line: K-line → Pattern → Stroke → Line segment → Smallest level central zone (e.g., 1-minute)
- Converts chaotic K-lines into standardized minimal trend units
2. f1: Upgrading (constructing higher levels) - Rule: three consecutive sub-level trend types overlapping = higher-level central zone
- Example: - 3 overlapping 1-minute trend segments → 5-minute central zone
- 3 overlapping 5-minute trend segments → 30-minute central zone
- 3 overlapping 30-minute trend segments → daily central zone

3. Popular process (1-minute → daily)

1. 1-minute chart: draw pattern → stroke → line segment
2. Use line segments to form 1-minute central zone and trend type
3. 3 overlapping 1-minute trends → 5-minute central zone
4. 3 overlapping 5-minute trends → 30-minute central zone
5. 3 overlapping 30-minute trends → daily central zone

4. Recursion vs cycle switching (many people confuse)

- Recursion: bottom-up, strict deduction (building daily from 1-minute), the most accurate structure
- Cycle switching: directly look at the daily chart (visually observe large K-lines), just “different microscope magnifications,” not strict recursion

5. Remember this in one sentence

Recursion = using small parts to assemble a large structure, following one set of rules across all levels.