Creating chart analysis, in simple terms, is a set of geometric logic. To truly understand it, you need to start from the most basic definitions—this may sound like old advice, but it’s actually the most practical in real trading. No matter how complex the trend, returning to fundamental definitions reveals that it’s not so mysterious after all.

The most common stumbling block in pattern analysis is simply the containment relationship between candlesticks. But as long as you understand geometric thinking, some inferences will naturally come to light:

First, use [di, gi] to mark the interval formed by the lowest and highest prices of the i-th candlestick. When breaking upward, a sequence of n consecutive candlesticks with containment relationships is equivalent to the single candlestick corresponding to the interval [maxdi, maxgi]. In other words, these n candlesticks and the candlestick that contains both their highest and lowest points are essentially the same. The downward trend is the reverse, corresponding to the interval [mindi, mingi].

Second, the associative law is the foundation of Chanlun. The analysis of candlestick containment relationships must also follow this law. But here’s a pitfall: containment relationships do not satisfy the transitive law. If candlestick 1 and 2 contain each other, and candlestick 2 and 3 contain each other, it does not mean candlestick 1 and 3 contain each other. Therefore, analysis must be done in sequence: first, determine the containment relationship between candlesticks 1 and 2 to generate a new candlestick; then compare this new candlestick with candlestick 3—if they contain each other, continue combining; if not, treat the new candlestick as a normal candlestick.

Third, what does "upward," "downward," etc., really mean? This is the key to truly understanding the trend.