Cryptocurrency Exchange - Chan Zhong Shuo Chan Trend Central Level Expansion and the Third Type of Buy and Sell Points

Note: The expansion of the central level still primarily depends on the original definition of the central. Without at least three consecutive secondary trend types overlapping, a higher-level central cannot be expanded.

It has been clearly pointed out that, in the Chán Zhong Shuo Chán trend, the central is determined by the overlapping part of the first three consecutive secondary trend types. Subsequent trends fall into two categories:

1. Extension of the current central.

2. Formation of a new central at the same level.

(Note: Category 2.1: New central formation; Category 2.2: After creating a new same-level central and expanding the previous central into a larger central.) In trends, the same-level central in the previous and subsequent Chán Zhong Shuo Chán trend cannot overlap, including any overlaps between momentary fluctuations around the trend central (Note: New central formation).

Therefore, even if the overlapping interval of three consecutive secondary trend types does not overlap with the previous trend central, if the fluctuations around this central touch a momentary fluctuation interval of the previous trend central during its continuation, then this trend type should not be regarded as a trend, but merely as the formation of a larger-level Chán Zhong Shuo Chán central (Note: Central expansion).

(Note: The previous paragraph describes three situations; 1. Central extension; 2. Formation of a new non-overlapping central at the same level; 3. Fluctuations of a new same-level central touching the previous central’s continuation fluctuation interval, producing a higher-level central.)

Here, two situations must be strictly distinguished (Note: Distinguishing between categories 1 and 3):

1. Trend central and its extension. In this case, all preceding and subsequent secondary fluctuations around the trend central must at least touch the central’s interval. Otherwise, a new overlapping part of three consecutive secondary trend types will inevitably form, diverging from the original central, which contradicts the continuation of the central.

2. Before a trend central is completed, its fluctuations touch a momentary fluctuation interval of the previous central or its extension, thereby producing a higher-level central.

A simple example can distinguish these situations: For example, if a stock opens immediately with a limit-up, it can only be considered as an extension of a trend central at the one-minute level. No matter how long this extension lasts, it cannot produce a higher-level central. If the stock continues to open with limit-ups the next day, forming a trend at the one-minute level, this trend can extend infinitely, but as long as only a one-minute central is formed, no matter how many days of limit-ups, it is insufficient to form even a five-minute central unless there is a break in the limit-up. Another special case is the so-called “block stock,” where a manipulator with serious issues trades only once a day at the same price, forming only a one-minute central, and no higher-level central can form.

In other words, trend central extension and the continuous formation of new trend centrals, which do not overlap with surrounding fluctuations and form a trend, cannot produce a higher-level central in these two cases (Note: Central extension and trend continuation).

To form a higher-level central, a third method must be used: fluctuations around the new same-level central that overlap with a certain fluctuation interval around the previous central. From this, an important theorem can be immediately derived:

Chán Zhong Shuo Chán Trend Level Continuation Theorem 1: Before a higher-level Chán Zhong Shuo Chán central forms, the trend type at that level will continue. That is, only consolidation or trend continuation at that level with the existing central.

Looking at last year’s index trend, the importance of this theorem becomes clear. Many people always say, “It’s already risen so much, why keep rising?” Understanding this theorem reveals that, for the market to fall, the current trend, which at most only shows a daily-level central, cannot end before a weekly-level central appears. Moreover, since last August, the trend has not even formed a daily central, only a 30-minute one. To end this trend, a daily central must first form. Understanding this theorem prevents unnecessary self-fear. From Theorem 1, a more important theorem about trend changes can be proved, providing a more precise and preemptive definition:

Chán Zhong Shuo Chán Trend Level Continuation Theorem 2: A higher-level Chán Zhong Shuo Chán central forms if and only if the fluctuation intervals around two consecutive same-level centrals overlap.

A simple analogy makes this easier to understand: a Chán Zhong Shuo Chán central is like a star, and the planets orbiting it form a star system. To form a larger system, the outer planets of two same-level star systems must at least interact, which is what Theorem 2 states.

With these theorems, the issue of trend centrals can be discussed more precisely: Based on the mathematical expression of the central, A, B, C, with high and low points a1\a2, b1\b2, c1\c2, the central interval is [max(a2, b2, c2), min(a1, b1, c1)]. The formation of a central is either by a rebound or a pullback.

For the first case, a1 = b1, b2 = c2; for the second, a2 = b2, b1 = c1. But regardless of the case, the central formula can be simplified to [max(a2, c2), min(a1, c1)]. Clearly, the direction of segments A and C aligns with the direction of the central formation. This shows that, in the formation and extension of the central, the overlapping of intervals of secondary trend types consistent with the central’s direction determines the central. For example, a rebound-formed central is determined by the overlapping of upward secondary trend intervals, and vice versa. For convenience, these secondary trend types consistent with the central’s direction are called Z trend segments, labeled as Zn in chronological order within the central, with corresponding high and low points labeled as gn and dn. Four indicators are defined: GG = max(gn), G = min(gn), D = max(dn), DD = min(@dn), with n traversing all Zn within the central.

In particular, define ZG = min(g1, g2), ZD = max(d1, d2). Clearly, [ZD, ZG] is the interval of the Chán Zhong Shuo Chán central, leading to the following theorem:

Chán Zhong Shuo Chán Central Theorem 1: The extension of a trend central is equivalent to the overlap of any intervals [dn, gn] with [ZD, ZG]. In other words, if there exists a Zn such that dn > ZG or gn < ZD, then the trend is upward and continues. Conversely, if ZG < ZD and GG ≥ DD, or ZD > ZG and DD ≤ GG, it is equivalent to forming a higher-level trend central.

From Theorem 1, the third type of buy/sell point can be derived: If a secondary trend type moves upward away from a Chán Zhong Shuo Chán central and then retraces with a secondary trend type whose low point does not fall below ZG, it forms a third buy point; if it moves downward away from the central and then retraces with a secondary trend type whose high point does not rise above ZD, it forms a third sell point.