Cryptocurrency Exchange - Trend Perfectly Completed

All trends at any level can be broken down into two categories: trend and consolidation, and the trend itself is divided into upward and downward. The above conclusion is not something that falls from the sky but is summarized from countless graphical analysis practices, just as the Analects say, “From teaching you, do you understand! To know is to know; not to know is not to know; this is wisdom.”

(Please see the corresponding series explanation of this ID -------- note: Confucius said: Practice teaches you, and through this you gain wisdom. Further practice based on wisdom leads to new wisdom; without practical application, wisdom cannot be further developed, and no new wisdom will emerge. This is the most fundamental wisdom.)

This simple experience summarized from actual graphics is the only solid foundation for all technical analysis theories. All those involved in technical analysis know this foundation, but unfortunately, no one delves deeper, and they become trapped in the苦海 of technical indicators, trading systems, and so on. Imagine, if the foundation is not understood clearly, what can be built upon it? Once the foundation is solid, technical indicators and trading systems are trivial.

From this, we can derive:

“Basic Principles of Chan Zhong Shuo Zen Technical Analysis 1”: Any trend of any level and type will eventually complete. The more concise way to say this is “the trend will ultimately be perfect.”

The importance of this principle lies in transforming the summarized, static, and difficult-to-apply concept of “all levels of trends can be decomposed into trend and consolidation” into a dynamic, practical concept of “trend types will eventually complete.” This is the wisdom mentioned in the Analects: “All levels of trends can be decomposed into trend and consolidation” is “not to be worried about,” meaning it is non-hierarchical, without rank. Conversely, the “trend type will eventually complete”—the trend’s ultimate perfection—is ranked because it is based on the non-hierarchical decomposition of “all levels of trends into trend and consolidation,” which is non-hierarchical, and this is the worry.

Because in actual operation, the trends faced are all lively and current, and as the Analects say, “Few are those who understand, those with virtue!”

------(Note - Confucius said: Walking, practicing, “hearing, seeing, learning, practicing”—the wisdom of the “Sage’s Way”—the gentleman who gains it is always in innovation and creation)

Only by facing this current, lively state can creation occur. At any moment of a trend, whether it is consolidation or trend, there is a dilemma: whether to continue or to change. For example, if it is in a trend, should it continue or change into an opposite trend or consolidation? Such questions are always “not to be worried about” at the current level, non-hierarchical. Anyone claiming to solve this dilemma is as ineffective as claiming to be unaffected by Earth’s gravity. This is something every person facing graphical analysis must always keep in mind. But this “not to be worried about” dilemma, under the “non-hierarchical” premise of “all levels of trends can be decomposed into trend and consolidation,” becomes its “worry,” and thus it can be ranked.

(The understanding of this problem can refer to the explanation of the relevant chapters of the Analects in this ID: ----Note: “Not to be worried about,” non-hierarchical; “worry,” based on the non-hierarchical “not to be worried about” and “ranking.” What is “ranking”? It refers to the changing positions. For example, in the Book of Changes, the Qian hexagram, from “Initial Nine” to “Upper Nine,” represents different positions, corresponding to different states of change).

Because the current trend is a dilemma, that is, in a dynamic process from imperfection to perfection, this forms the basis of its “not to be worried about” and ranking. “The trend will ultimately be perfect,” and the trend can be decomposed into trend and consolidation without worry; in other words, “the trend will ultimately be perfect, and consolidation will also be ultimately perfect.”

The phrase “the trend will ultimately be perfect” has two inseparable aspects: any trend, whether trend or consolidation, will eventually be completed graphically. On the other hand, once a type of trend is completed, it will transform into another type of trend, which is “not to be worried about” and has its own position. In technical analysis, different positions form different trend types, and various positions are non-hierarchical but have positions. How to flexibly move between different positions is the most difficult part of practical operation and one of the core issues of technical analysis.

To study this complex problem in depth, it is necessary to first introduce the concept of the central zone in Chan Zhong Shuo Zen trend: the part of a trend type at a certain level that is overlapped by at least three consecutive sub-level trend types is called the Chan Zhong Shuo Zen trend central zone.

In other words, the Chan Zhong Shuo Zen trend central zone is formed by the overlapping of at least three consecutive sub-level trend types. There is a recursive problem here: this sub-level cannot go infinitely downward, just as some superficial philosophy babbles about “one divided into two,” but “dividing” is not infinite. According to quantum mechanics, the division of matter has limits; similarly, the levels cannot be infinite. In practice, for the last indivisible level, the Chan Zhong Shuo Zen trend central zone cannot be defined as “overlap of at least three consecutive sub-level trend types,” but rather as the overlap of at least three unit K-lines of that level. Generally, for practical operation, the lowest indivisible level is set as 1-minute or 5-minute lines; of course, it can also be set as 1-second lines, but there is little difference.

With this definition, one can find the “Chan Zhong Shuo Zen trend central zone” in any trend at any level. With this central zone, we can give the most precise definitions of “consolidation” and “trend”:

Chan Zhong Shuo Zen consolidation: In any trend at any level, if the completed trend type contains only one Chan Zhong Shuo Zen trend central zone, it is called the Chan Zhong Shuo Zen consolidation at that level.

Chan Zhong Shuo Zen trend: In any trend at any level, if the completed trend type contains at least two or more consecutive Chan Zhong Shuo Zen trend central zones in the same direction, it is called the Chan Zhong Shuo Zen trend at that level.

The upward direction is called an uptrend; downward is called a downtrend.

Is it possible for a trend at some level to contain no Chan Zhong Shuo Zen trend central zone? This is impossible. Because any graphical “up + down + up” or “down + up + down” will inevitably produce a Chan Zhong Shuo Zen trend central zone at some level. A chart without a Chan Zhong Shuo Zen trend central zone only means that the entire chart has only two possibilities: one is a continuous downward movement after an initial downward, or a continuous upward movement after an initial upward. For these two situations to occur, the trading instrument must be permanently canceled after a certain period of trading, which is not the general case of trend analysis. The premise here is that the trend can continue indefinitely without being permanently canceled, so accordingly:

“Basic Principles of Chan Zhong Shuo Zen Technical Analysis 2”: Any completed trend type at any level must contain at least one Chan Zhong Shuo Zen trend central zone.

Based on Principles 1 and 2, and the definition of the Chan Zhong Shuo Zen trend central zone, we can rigorously prove:

“Chan Zhong Shuo Zen Trend Decomposition Theorem 1”: Any trend at any level can be decomposed into a sequence of “consolidation,” “downtrend,” and “uptrend” types at the same level.

“Chan Zhong Shuo Zen Trend Decomposition Theorem 2”: Any trend type at any level is composed of at least three or more sub-level trend types.

These proofs are straightforward, similar to proofs in junior high geometry—interested readers can try them themselves. From these principles and theorems, two solid foundational points for practical operation can be established: because a certain trend type, once completed, will transform into other types of trends, for a downward trend, once completed, it can only transform into an uptrend or consolidation. Therefore, if one can grasp the key turning points of a downward trend for buying, it positions the trader advantageously in the market. This buying point is what has been repeatedly emphasized as the “first type of buying point”; and because trends and consolidations must ultimately be completed graphically, the low point created by the first sub-level correction after the first buy point is the second most advantageous position in the market. Why? Because both uptrends and consolidations must be completed graphically, and their graphical requirements include at least three or more sub-level movements, so there must be at least one more upward sub-level movement afterward. Such a buying point is absolutely safe, guaranteed by the trend’s “not to be worried about” property, which is the second type of buy point emphasized repeatedly earlier. The situation for sell points is the opposite.

In summary, it is not difficult to understand why this ID repeatedly emphasizes these two types of buy and sell points earlier. Because these two types of buy and sell points are strictly guaranteed by the most fundamental analysis, just like rigorous theorems in geometry. As long as these two types of buy and sell points are correctly identified, they are invincible in actual market trends, the most solid harbor amid turbulent markets. The logical relationship between these two types of buy and sell points, the trends, and the above principles and theorems must be truly understood and appreciated. This is the most solid and least confusing foundation for all operations.

From these principles and theorems, we can further prove the previously mentioned “Chan Zhong Shuo Zen Buy and Sell Point Law 1”:

“Chan Zhong Shuo Zen Buy and Sell Point Law 1”: Any second-type buy or sell point at any level is composed of the first-type buy or sell point of the corresponding sub-level trend.

As a result, just as previously stated, any Chan Zhong Shuo Zen buy or sell point composed of first and second types can be reduced to first-type buy or sell points at different levels. From this, we derive:

“Chan Zhong Shuo Zen Trend Reversal Law”: Any upward reversal at any level is caused by a first-type sell point at some level; any downward reversal is caused by a first-type buy point at some level.

Note that this level does not necessarily have to be a sub-level, because sub-levels can include second-type buy or sell points, and there can also be situations where first-type buy or sell points appear simultaneously at different levels, i.e., different levels resonate synchronously. So here, it is simply referred to as some level.

The theoretical framework of technical analysis constructed above by this ID is unprecedented, just like Euclid’s geometry. It has established a solid theoretical foundation for the complex field of technical analysis. From these principles and theorems, further theorems can be derived, just like in geometry. These theorems are all established independently of incidental factors; actual operations must be based on this foundation to ensure long-term invincibility.