• ...prices leave clues...
• ...about a flag breakout, about the purple box...
• ...rely on yourself, not on others...
Column subscription link:https://www.meridianresearch.app/home?product=cross-market-strategies
See the first issue:26-01-21 “Case Collection (I): Understanding the Odds in Depth”
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I. Opening Remarks: The Purpose of These Cases
As an update after a long hiatus, whether to continue the case collection series has been a difficult question for me.
On the one hand, I feel embarrassed to show things that seem to demonstrate how right I was. All trading plans actually contain private elements. I dislike boasting and don’t like receiving too much attention. The successful past and present have long ceased to bring any positive emotional feedback; they bring only pressure and pain. That makes writing very difficult: I feel awkward writing it, and you feel awkward reading it. But on the other hand, cases actually unfolding in the market right now are the most important.
A lot of what can be found externally—those courses and books, those market commentators and trading gurus—is often viewed through the rear-view mirror, or comes with a degree of ambiguity and embellishment. This is a path I, too, once searched for tirelessly. Real trading results, the successes and failures that happen every moment, mean far more to people who want to earn a living in the market with their own hands than those polished bestsellers. Only practical experience can guide practical trading. You cannot learn to play chess by reading only the game records written by literary authors.
The case collections are also written for the me of the past, and for those years.
Figure: Prices do leave clues; they really do leave clues
Make an effort to rely on yourself, not on others; you can’t depend on others
Note: The content of this case collection is drawn from posts on Honglong Planet over the past two months
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Example 1: Horizontal Line Breakout
Daily chart, as of 260617 (Original post）
The purpose of coloring the candlesticks in different colors is to make it easier for everyone to see the bar-by-bar turning points. This is not particularly significant in itself; it is just for teaching, to make things clearer.
This is a recent case. In the mainland market data summary table, conditions shifted from Leading to Weakening to Improving; deleveraging ended, and the bullish and bearish energy of individual bars gradually declined, changing from green to yellow, then to purple and red. During this process, the bearish candle bodies became smaller. After narrow consolidation at the bottom of the range, a failed breakout (the three bars that turn red on the chart) was followed by an engulfing bar (the first bar that changes from red to blue), returning inside the trading range. This is the first low signal; aggressive bulls could plan an entry here, Generally speaking, if the decline really ends here, the price will not fall below the engulfing bar’s low (and that is indeed what happened in this case: this bar formed the low, which was never breached again).
After being rejected at the orange line, the price fell again, but all closes remained inside the range (the closing price is most important). The following day, funds flowed back in, and price consolidated narrowly around the middle of the range; afterward, price moved above the 50dma, approached the key horizontal line, and completed a horizontal line breakout.
...
Example 1: Breakout
Daily chart, as of 260622
As of 260222 (an index-consolidation day), it broke out and closed limit-up.
In the trading plan, the blue line marks the long entry level; the stop-loss for the SL entry is placed at the low of the first engulfing bar that turned from red to blue(the level it should not break below if the decline has ended).
Example 2: Inside information, price, and capital flows
Daily chart, as of 260616 (Original post）
This is a news-driven price pattern. In fact, before the first rally, my researcher had already sent me a package of materials on it, and we also participated in the initial entry. We paid attention to it again because after the earlier news announcement had run its course, the price did not fall back into the previous area of heavy trading. On the contrary, it stabilized near the top of the prior range and resumed its upward slope. This was unusual: generally, a genuine failure would fall at least back to the midpoint or lower boundary of the previous range. If something unusual happens, there must be something going on.
At the time of 16, its price was back above the value area high and the orange line near the close, forming a danger zone. A danger zone means that room for movement in both directions is opening up at the same time: if it successfully breaks through the next day, it will trigger another move higher; if it fails, it will officially fall back below 13 yuan.
Example 2: Broke out the next day and has continued to hit limit-up since
Daily chart, as of 260622
After breaking above the red line, the expected further rise began, and volatility expanded sharply.
We have no inside information, but we understand price; no action by any source of capital escapes our notice. News is fake, news is a tool, and only price is real.
Example 3: Thematic trading and basket bets
The thematic basket enters the batting zone (Original post）
Example 3: One of the three systems of fundamentals
More fundamental information (Original post）
The main reason this thematic trade is worth watching is that the second tier within it (secondary proxies, that is, those that are not directly positively affected) and the primary proxies are being traded in sync, with striking sensitivity. This generally occurs along paths that are being pursued and watched by broad-based capital, and therefore offers greater confidence as a trade.
Example 3: Second-tier proxies also follow the move, often indicating that broader capital is taking notice
The second-tier proxies in the basket also followed suit and began moving higher (daily chart, as of 260612) (Original post）
The entry day marked the start of an expanding-range rally; the rise has continued to date. As of now, 6 bars, +30%, approaching the T1 target price
Example 3: The thematic basket on the day after the post
Collective limit-up
The day after the post, a batch of stocks hit the daily limit (Original post）
Basket constituents have already reached new highs to date (daily chart, as of 260622)
Basket constituents have already reached new highs to date (daily chart, as of 260622)
Basket constituents have completed a bottom reversal (daily chart, as of 260622)
Basket constituents have completed a bottom reversal (daily chart, as of 260622)
Basket constituents have completed a bottom reversal (daily chart, as of 260622)
In short, When making a thematic bet, look at the fundamental rationale, but also pay attention to differentiation across levels. The purpose of examining these levels of differentiation is to see whether they can mutually confirm one another and form a consistent picture. Only when they do can you begin considering an entry.
Example 4: The side that wins the battle will trigger a sharp expansion in volatility in the corresponding direction
There are reasons for both rises and falls, and often these reasons are not visible to the naked eye (Original post）
Example 4: The side that wins the battle will trigger a sharp expansion in volatility in the corresponding direction
The post date marked the start of the volatility expansion, and a new high was reached (daily chart, as of 260622)
This trade: 1) took place after sustained probing (A narrow-range consolidation relative to the historical average), 2) shifted from lagging to improving, 3) broke through the key horizontal level, The bulls defeat the bears
Example 5: A clamp breakout
An example of a clamp breakout (daily chart, as of 260420) (Original post）（A reminder）
A clamp breakout is my own definition; completing the setup requires several conditions，1) A pullback occurs after a prior major uptrend, and during the pullback a Value Area forms. 2) After breaking below the Value Area, price returns to its lower boundary and, following narrow-range consolidation (probing) relative to the historical average state, breaks out of the consolidation range (the candle marked 0420 on the chart). This is the first entry point for the bulls. 3) A break above the upper boundary of the Value Area is where volatility officially expands. For a clamp breakout trade, the stop should be moved only after the price breaks above the upper boundary of the Value Area (move it directly into the take-profit zone).
A clamp consists of a downtrend line following an upswing, the lower boundary of a Value Area, and the upper boundary of a Value Area. The main problem with a traditional descending triangle breakout is that every prior horizontal level becomes resistance on the next move up. It is therefore essential to combine the Value Area with the power of a failed breakout.
Example 5: A clamp breakout that has already doubled in value—a textbook swing trade (8 weeks)
8 weeks, +100% (daily chart, as of 260622)
Likewise, At the true starting point of a rally, the low of the key candle will not be retested; that low will remain a genuine low.
Example 6: A simultaneous horizontal-level breakout in the same theme
Example 6 is also a basket trade case. In fact, basket trade cases have been featured in the newsletter all along, includingMLCCBasket trades, trades in a basket of tungsten hexafluoride These are bets with returns above 100%, and we bought them all before they took off, when nobody in the market was paying attention. I won't repeat what has already appeared in the weekly newsletter; you can review it yourselves.
Basket trading is the betting approach I use most, because it best embodies the idea of things being aligned.A good top-down trade should not require in-depth stock picking. Of course, doing well on the bottom-up side at the same time would be even better; that's a matter of detail. What I mean is that, in fact, once you've chosen the basket well, the job is already more than 90% complete. After all, your field of view has narrowed from thousands of securities across the whole market to a dozen or a handful. At that point, doing bottom-up analysis is much less effortful and more precise.
Daily chart, as of 260622; new high
Daily chart, as of 260622; new high
This basket overlaps with many other themes, but they all began to rise on the same day. I won't list them all here; you can review them yourselves.
Example 7: Wedge breakout + Value Area; it has doubled so far, a textbook swing trade (8 weeks)
Daily chart, as of 260416 (Original post）
The day after the post formed the start of an expansion in volatility, and the price has risen ever since.
Wedge-breakout trades on the daily timeframe generally need a window of 6-8 weeks to fully play out. This is also the time horizon swing traders should target. During the price move, the low of the breakout day is not breached; this example is no different.
The day after the post formed the starting point of an expansion in volatility, and the low has not been touched since.
Example 8: A renewed move higher after support at the annual moving average
After finding support at the annual moving average on 4/13, the price broke out of the consolidation area around the pivot and began rising again (daily chart, as of 260622) (Original post）
This is a case of finding support at the annual moving average on a pullback and then starting up again.The post on the platform went up in the morning on 4/13 for two reasons: 1) support at the annual moving average was confirmed; 2) during the morning session, the price successfully broke above the narrow consolidation range that had formed since the pivot (a range narrow relative to the historical average volatility).
As the key breakout candle, that day's low has not been touched since. The price began rising steadily the day after the post and has continued to do so; it has now turned back near the black line marking the target price.
This can also be viewed as a wedge breakout: 1) a break above the downtrend line; 2) a break above the horizontal line marking the top of the narrow bottoming range. However, I prefer to view it as support at the annual moving average, for a simple reason:It doesn't really meet the prerequisites for a wedge breakout: before the pullback, there was not a smooth, strong uptrend. Prerequisites matter. Discussing setups or chart patterns without considering the prerequisites and market context is something beginners do. You must pay attention to the prerequisites; don't just focus on the tiny patch in front of you—look farther out and take in the bigger picture.
Example 9: One of the cycles of “no breakthrough, no progress”
Life cycle and refrigerants/PTFE bet (Original post), the day after the post formed the starting point of the rise; as of now, it has reached a new high
The bet on refrigerants/PTFE began at 6.2; that day, a batch of related proxies began to improve.
Example 10: The cycle of breaking before building, part two
Another similar setup (Original post）
Rare earths; the day after the post, the range widened + a new high has already been made as of now (daily chart, as of 260622)
Likewise, the day of the post marked the actual starting point of the rise. It did not rise because we bought; we bought because we judged that it was about to rise, You want to buy before the move starts, but not too early. The thing to strive hardest for—and to put as specifically as possible—is buying on the bar just before the move starts the one before the start。
Example 11: Purple box
5-minute chart, as of 260416 (Original post）
Old friends will smile knowingly when they see the words “purple box.” This is our own language, and a secret signal for finding kindred spirits in the market.
This is a case of a pullback and consolidation after a rise on the daily timeframe. It could actually be marked on the daily chart, too, but it is clearer on a smaller timeframe (for teaching purposes; of course, if you are just starting out, I also recommend looking for those very long purple boxes on the 5-minute smaller timeframe).
A purple box is an area where the 50-period and 200-period MAs on a short timeframe cross wildly. This area means that the market has completely finished pricing in the previous trading logic, and everyone is waiting here for a new catalyst. It could be news, or information; in short, anything could take the price out of the purple box, and the direction in which it breaks out is the direction of the widening range.
Daily chart, as of 260622
This is also a breakout from a range; the price action took 8 weeks to unfold. The post-day closed above the purple box, confirming the breakout; from there it continued rising all the way to the present and doubled. The post-day low became a definitive low and was never touched again. The post-day marked the actual starting point of range expansion and the rise. We have only one goal: to buy before the move starts, because.....
Fill in the rest yourself; new friends who don't know can look through the history of the community.
That's enough for now.
This chart needs to be put aside again: rely on yourself, not on others; you can't count on others.
My purpose is also simple: to tell all of you that prices really are traceable and that through your own efforts you can get what you want.
There may not be a next installment. We'll see.
It's thanks to everyone's generous regard for me. I'm not important, and I have no intention of becoming famous; I'll keep my head down and work quietly. The community's content is for our own internal use; let's try not to share it outside.
My thanks to you all. Thank you, friends.
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