I suggest everyone interpret the market through three basic elements:

price, volume, and trend speed. The theoretical basis for interpreting
trends is the supply and demand relationship. Now let's talk about how
professional investors interpret price and volume.

Firstly, identify the support and resistance levels of the target asset.
(I have already taught some methods, such as trendlines, moving averages,
etc.), and then identify overbought or oversold conditions based on the
speed of the trend, such as the angle of trendlines, RSI values, etc.

After mastering the basics, we make judgments on whether there is control

over the current stage, such as the abnormal movements of price and volume.
If there is no participation from the main players, then this market
movement is ineffective and lacks significance.

For example, if the market is at the top, we can observe the changes in
volume to see if the main players are creating hype to attract public
traders to enter the market. If at the bottom, we can also use the
performance of volume to judge whether the main players are creating panic
to force trapped buyers to sell. By observing the changes in price and
volume, we can find the balance point of supply and demand, commonly known
as support and resistance.

Finally, determine the beginning and end of the main force's absorption
or distribution, identify whether the main force is absorbing selling
pressure at resistance levels, and judge whether there will be a
breakthrough. Of course, all these volume aspects will have a good
performance.

To simplify the narration just now, please remember the following

sequence:

● Background - uptrend, downtrend, consolidation.

● Price-volume patterns: candlestick length, volume height, rate of
change.
● Nature of price-volume patterns: strength of trend, reasons for
price-volume patterns, and possible consequences.
● Conclusion or prediction: Insight into the intentions of the main
players and judgments on the direction based on the above two aspects
and the supply-demand relationship.
● Measures and actions: Decide whether to take action based on the above
information. For example: enter the market, exit, tighten stop-loss, etc.

For a better understanding, let's move on to the graphic analysis stage.

Let's start with a simple example (although this is a simple pattern,
it is commonly encountered in actual trading).

Everyone please note that the upward trend from A to B is strong, with
increasing volume. Pay attention to the retracement after candle 1, where
both the candle and volume decrease. We can see that the downward momentum
is weak.

Now, think about what this kind of market represents. The small candle
and low volume retracement indicate that there is no supply entering the
market, suggesting that the market prices may attempt to rise later. As
I mentioned in previous classes, a decrease in volume suggests that there
is no panic selling from the sellers in the current market, and the market
buying and selling pressure is also small. If we look at it from the
perspective of supply and demand, with the decrease in market supply,
there is a higher possibility of price recovery, right? So, when you see
such volume-price behavior, actively look for short-term lows, observe
the cessation of the downward movement, or the phenomenon of demand taking
over, and enter the market after confirmation.

If everyone understands, let's extend our analysis with the chart we just
discussed. Take a look at the chart below.

From C to D, the market still shows an upward trend. However, during the
subsequent retracement process, the intraday decline begins to widen,
and we notice an increase in volume compared to the previous period. Now,
let's start thinking: when the retracement is greater than the upward
momentum, does it not indicate a deviation from a healthy upward
structure?

Therefore, when we see the relative increase in volume along with the
widening range of prices, it indicates an increase in selling sentiment
in the market. With more sellers and an expanding supply, can we expect
a short-term uptrend in prices? Clearly, the conclusion is no. In such
a scenario, we should not go long. Instead, we should patiently wait for
the exhaustion of supply before entering the market. For instance, when
the rate of price decline slows down or when volume diminishes.

Now that we've understood this simple example, let's move on to a slightly
more complex overall analysis. You can see that after the downward trend,
the market enters a phase of consolidation and range-bound trading：

The rapid decline from A to B occurred without encountering any resistance

from buyers, indicating an oversold market condition. Also, note that
the volume during candle B reached its peak, indicating panic selling.
Based on these observations, we analyze whether the market demand is
absorbing the selling pressure.
Due to the oversold condition, we expect at least a price rebound. However,
will the main players pull the price back to the previous oscillation
zone to help those trapped in positions? Unlikely.

Before candle A, trading occurred in a range-bound market. After candle

A broke below the oscillation zone, a large number of retail traders found
themselves holding losing positions. At this point, they might hope for
a quick price recovery to offset their losses. When the price approaches
a retest of the oscillation zone, their behavior adds to the selling
pressure, which increases the supply.

If the market is to rise, we must witness a preparatory process (the

so-called accumulation phase) before the upward movement. The main
players need to acquire cheap stocks during this phase. Therefore, to
propel the price into an upward trend, the main players must force those
retail traders to sell at the bottom. This way, the main players not only
acquire cheap stocks but also reduce selling pressure when the price
returns to the oscillation zone.

So can we buy now? Obviously, we cannot buy now because we haven't seen
the preparatory process before the uptrend.

Let's look at the A-B phase. After the panic selling, the price rebounded,
which was in line with our expectations. If you encounter such panic
selling in the future, you should compare the relationship between price
decline and volume, as I have mentioned in previous sessions. Especially
when the rate of decline slows down and volume increases, it indicates
that a bottom may be forming, and prices may rebound excessively.

Now, let's continue with candlestick 1. Its characteristics are as

follows: the price range for the day is extremely large, with a long upper
shadow, accompanied by very high volume. This indicates strong supply
encountered during the rebound. This supply includes chips bought during
the previous downtrend and panic selling, now being sold for profit, as
well as chips trapped earlier and short-term stop-loss exits. Due to the
influence of the previous bearish market sentiment, coupled with the
sudden surge in supply in the market, the market sentiment is currently
very unstable, so we should not buy now. We need to observe the magnitude
of the later pullback.

After a pullback following a candlestick, the price rises again. But

candlestick 2 stalls at the resistance level, accompanied by increasing
volume. Increased volume indicates expanding supply and demand. Supply
comes from public selling, but such a large amount of selling did not
cause prices to continue to plummet; instead, it reduced the range and
extent of the decline. This is because demand is expanding, and the demand
generated by the main players' buying exceeds the supply generated by
public selling, with demand starting to dominate. Volume stagnation
during a downtrend and volume stagnation during an uptrend both belong
to stopping behavior, collectively referred to as SOT. This again
indicates that supply exceeds demand at the top. Looking at the rise from
candlesticks 4 to 5, volume significantly declines, indicating that the
demand generated during the previous panic selling has dried up. However,
the market sentiment between bulls and bears has not changed at this point,
so we should not buy.

At the BC stage of the trend line, the high points of the candles continue
to decrease, while the low points continue to increase, and the price
fluctuations narrow, forming a contraction triangle pattern with the
resistance line. This implies that after the price breaks this structure,
significant fluctuations may occur. However, the current background is
that supply exceeds demand, so as long as the pullback puts in a little
more effort, it could break below the trend line, leading to further
significant declines in prices. If prices decline, we expect candlestick
4's low point, which is the support of the pivot, to hold. If candlestick
4 is breached, the market may retreat to the previous low point, and we
can only hope that the support generated by panic selling will hold.

As shown in the chart, after the price breaks BC, it quickly declines
without any resistance. This speed makes us suspect that this is a
Shakeout. Shakeout refers to a deliberate action to lower or raise prices,
with the aim of prompting the public to liquidate their current positions
while speculators take advantage of this opportunity to enter the market.
It is divided into ordinary shakeout and ultimate shakeout. Ordinary
shakeout occurs in an upward trend, mostly due to adverse news causing
temporary market fluctuations. After an ordinary shakeout, prices
quickly recover and resume their upward trend. Ultimate shakeout occurs
during the accumulation process, with the aim of forcing the public who
are still holding onto their stocks to sell, to assist in the accumulation
by the main players.

Now the key is to see whether market sentiment will appear to support
the previous bottom. Looking at it, when prices reach the support area,
the range of highs and lows of candlestick 7 significantly narrows, while
the volume does not decrease. This indicates a stopping behavior,
indicating that supply is drying up, while new demand is stepping in.
Especially the last bullish candlestick indicates that demand has
absorbed all the supply. The slightly higher support level indicates that
the main players have fully acquired the stocks below and are now starting
to buy upwards. In other words, the main players have completed their
accumulation, and they are now allowing prices to rise.

Such a market structure has been applied in our previous aggressive stock
purchases. Now the market tells us that the accumulation is over - it's
time to enter the market!

Take a look at the chart below. Typically, we buy after confirmation at

the bottom. During the price rebound process, whoever first reaches the
position of the previous highs (1-6) and effectively breaks through that
point, the market continues to test the previous oscillation range before
the decline. Since the oscillation range contains a certain amount of
trapped chips, breaking through that point without effective bullish
stimulus is difficult, and instead, it forms a new oscillation structure,
leading to a reevaluation of direction.

Let's delve into a practical case study analysis, using the knowledge
of volume-price relationships we've learned to reflect the supply-demand
dynamics in the market. We'll use the familiar example of NSL for this
case study.
Let's take a look at the candlestick pattern on January 30th. Candlestick
1 indicates that after the price broke below the previous upward
consolidation structure, the volume significantly increased, and the
price dropped rapidly. This indicates that selling sentiment in the
market is increasing, with more sellers and expanding supply, suggesting
a potential continuation of the downtrend. Moving on to candlestick 2,
we see that the volume doubled compared to the previous day, with a similar
speed of decline. Although the market still experiences selling pressure,
demand is emerging. Observing candlestick 3, we notice that the decline
is almost the same as before, but the volume significantly shrinks. Does
this suggest that demand is starting to weaken in the downtrend? However,
the market sentiment has not changed significantly at this point.

Paying attention to candlestick 4, the volume continues to increase. This

marks the first instance where demand exceeds supply, indicating a
turning point. As the price rebounds to the mid-term moving average price,
which in our chart is the MA21, there are chips accumulated from panic
buying and trapped chips from the previous decline. Amid selling pressure
from both sides, the price encounters resistance again. Candlestick 5
shows significant volume but minor price fluctuations.

After facing resistance, the market continues to retreat. As we mentioned,

prices tend to seek support near previous lows. Candlestick 6 near the
previous low point shows a minor change in the decline, with volume three
times higher than the previous day, indicating a significant demand
response in the market. Candlestick 7 forms a bullish engulfing pattern
with candlestick 6, with volume continuing to increase, indicating
greater demand than supply. Later in the market, a rebound occurs, facing
a test at the mid-term average price. Understanding the supply-demand
dynamics in volume-price relationships can greatly assist in market
analysis.
let's use a chart to illustrate the application of supply and demand
dynamics in support levels. For easy identification, I've instructed my
assistant to represent regular candlesticks using white and black colors.
White will represent regular bullish candlesticks, while black will
represent regular bearish candlesticks.

Pay attention to candlestick 1, with its significant uptrend accompanied

by expanding volume. Typically, bottoms formed with such high-volume
rallies naturally create a support zone. Later, prices often retreat to
the bottom of this candlestick and then rebound. In an upward trend, the
first retracement low forms a pivot structure, similar to what we referred
to as the X-axis, with the secondary low price marked as the observation
point because it provides low-risk buying opportunities.

Candlestick 2 in the chart retraces to the demand zone. If the price

returns to the support, we observe whether there is a large influx of
buy orders and active absorption of selling pressure. If we don't see
a strong rebound after hitting the bottom, it indicates that buyers are
waiting for lower prices, rendering this support ineffective. If you want
to see the price hold at support, the test candle must be a small one,
indicating exhaustion of supply, which will attract demand to enter.

The high volume of candlestick 2 indicates increased trading activity,

with a large number of sell orders entering the market, aiming to push
prices further down. However, at this moment, the price does not
experience a significant decline, and the volatility decreases,
indicating that the sellers' efforts have not yielded results, and no
significant drop has occurred. Why did such a large influx of sell orders
not cause a significant price drop? This reflects a fact: the volume of
buy orders entering the market far exceeds the volume of sell orders,
or in other words, demand has completely absorbed these large sell orders,
preventing further price declines. If you intend to bottom fish, now is
the time to prepare, you can buy lightly and have a crisis management
plan in place. Once there is demand following, immediately add to your
position, which is to break through the position marked as A again.

Everyone continue to observe candlesticks 3 and 4. Carefully observe what

commonalities they share?

First: Both are on the right side of a small-scale oscillation zone.

Whenever the price is on the right side of an oscillation zone, we need
to determine which side of the supply-demand equation is strengthening
and causing the price to move away from the oscillation zone. On the chart,
if there are vertical demand or supply columns, the above theory can be
confirmed.
Second: The volume is either relatively increasing or decreasing, without
any explosive growth.
Third: Both are downward candlesticks.
By observing the above three behaviors, the relatively voluminous
downward candlestick on the right side of the top is a bearish signal
for the market, as sellers are unable to find buyers at high levels and
can only match lower-price buy orders by lowering prices. This indicates
that demand has been exhausted, and supply is beginning to dominate the
market. If you haven't exited yet, you must do so now; absolutely do not
buy again, as buying now would only help the main players exit, and being
trapped is inevitable.

Of course, it's important to remind everyone that not all supports can
serve as entry positions. Let's continue to look at the case:

If there is a weak rebound at the support level, it indicates that there

are few buy orders coming in at that price, suggesting that buyers are
not interested in this price level, which may lead to further downward
movement in search of buyers.

The effectiveness of a support level is primarily judged by the strength

of the rebound from that level. If you enter the market at a support level,
you assume that there are a large number of buy orders coming in to prevent
further decline. If there is no sustained demand in the following days,
but instead low-volume minor fluctuations, it indicates that there are
no significant buy orders entering the market, rendering the support
level ineffective, and prompting us to exit the position immediately.

When Candlestick 1 reaches the support level and rebounds, it signifies

a good stopping action. Its small range suggests a reduction in the extent
of the decline, while the high trading volume indicates a significant
influx of sell orders. However, the reduced range suggests that such a
large influx of sell orders did not produce significant results. As per
convention, when a stop in decline behavior occurs at a support level,
prices should rebound and rise. We pay attention to the strength of the
subsequent rebound, as it can tell us whether the support level is
effective.

Candlestick 2 shows a very small increase, closing near the middle after
reaching a high, indicating that there are not enough buy orders entering
the market to follow this rebound.

Candlestick 3 signals continued dominance of the market by supply. The

upper shadow indicates that the volume of sell orders on that day exceeded
buy orders (supply overpowering demand). Additionally, the increased
trading volume indicates that the rebound encountered strong supply
(likely due to major players selling at higher prices). The conclusion
is that the support is ineffective, leading to further price declines.

The situations of Candlesticks 3 and 4 are similar to Candlesticks 1 and

2, indicating a lack of demand support at the support level, resulting
in support failure. By observing the behavior of Candlesticks 1, 2, 3,
and 4, we can confirm the theory of support failure, signaling further
declines in the future. If you unfortunately bought into the rebound,
and see the behaviors described above, exit immediately. Do not let your
emotions and hopes override the fundamental market behavior.

Let's continue with the case study. Take a look at this chart first,
and think about at which marked point you would choose to enter the market.
Everyone take a look at the chart. This is a downtrend market following
an uptrend, where supply controls the market. The descending trend
channel (marked as B) in the chart has its lower line acting as an oversold
line. After observing oversold behavior in the trend, if a rebound breaks
through the supply line, which would normally see a large influx of sell
orders to prevent price increases, and if during the subsequent pullback
there is no significant increase in sell orders entering the market, it
indicates a lack of supply in the market, allowing demand to continue
dominating.

The horizontal line labeled as A is referred to as the "ice line," which

is the last line of defense in an uptrend. The large buy orders on the
ice line are trapped due to the breakout, indicating that supply has
overcome demand. After breaking the ice line, the magnitude of the
subsequent decline will be significant. Typically, the ice line position
is established at the low point of the rebound wave before a new high
in an uptrend, or at the low point of the rebound before a retracement
in a downtrend, as depicted in our chart.

Now let's delve into the details of the key candlesticks.

Candlestick 1: Near the ice line and supply line, which form a double
resistance zone as both are major supply areas. This position represents
the cost zone for buyers who were trapped earlier. At this point, these
distressed buyers are most hopeful of breaking even. When the price
retraces to the ice line, if they start selling (resulting in a large
influx of sell orders), the supply will expand. To continue pushing the
price higher, the main players will have to absorb this supply, sometimes
by encouraging retail participants to enter buy orders to help absorb
the supply at resistance levels. Sometimes, they may even absorb these
sell orders at a higher price to ensure the price continues to rise towards
their target.

Candlestick 2: Our initial reaction is that it breaks the ice line. As

mentioned earlier, the ice line is the price level where supply surpasses
demand. Its breach indicates that demand is strong enough to overcome
supply. In other words, all the supply at this price level has been
absorbed by demand, and the supply has been exhausted (there are very
few sell orders left in the market). This situation signals that the next
upward move is likely established, but you should not enter immediately
because the breakout is a public act, and our actions should not align
with the public. In this scenario, the safest entry point is when the
price retraces with small candles and low volume. This indicates a lack
of supply in the market, with demand continuing to control it.

Candlestick 3: No supply enters as it shows contracting volume and a minor

pullback. Demand maintains its dominance, meeting the conditions we are
waiting for (the buy theory is confirmed), and we start preparing to enter.
The next day, volume increases, and trading becomes active. However, the
price immediately rebounds upon testing the ice layer, closing above the
mid-range. This indicates that new demand has absorbed all the supply.
We can enter at this point, with the stop-loss placed at the low of the
breakout candle, as strong demand has emerged and broken through the
supply area.

Supply and demand dynamics form the basis of trends, and their imbalance
creates trends. We need to continuously assess the supply and demand at
each step to manage our trades. Changes in trends often first appear in
very small price actions, which conceal the theoretical basis for judging
trends. By using supply and demand dynamics, we can identify these subtle
changes in trends. All our explanations of trends in future examples will
revolve around supply and demand dynamics. We need to cultivate our
analytical skills to interpret supply and demand from price and volume,
thereby deciphering the intentions of participants behind the price,
namely the main players and ordinary traders.

Next we will continue learning about the analysis of supply and demand
relationships at resistance levels. Absorption, supply lines, and
horizontal resistance crossover.

First let's identify the supply zone and draw line A from the first rebound
high point after the decline. If the resistance is effective, a large
number of sell orders must enter the market (this is the theoretical basis
for resistance). Then, find the demand line for support. We must see a
candlestick pattern of reversal formation, and it must be accompanied
by increasing volume. If this situation does not occur, it indicates that
the supply has not been absorbed by greater demand.

Looking at the process of retesting the previous high after the price
retracement, the upward momentum is much lower than the frenzy of buying,
and the low trading volume indicates that there is no demand participating
in this rise. Up to this point, we can already judge the subsequent trend,
as confirmed by the subsequent high-volume downtrend.

Continuing to observe the recent market situation (on the far right),
both demand and supply are weak, as the trend forms a narrow channel before
the resistance level. Each day, both the trading volume and the trading
range are small, and trading is very inactive.

In an uptrend such upward surges followed by retracements are exploratory

behavior, and at this point, the main players may be conducting test
actions. If the retracement after the surge is very subdued (small
candlesticks, low volume), it indicates exhaustion of supply, and there
is a chance for the price to break through the resistance. To simplify,
if there are no sell orders (supply), any low-volume retracement is our
entry point. Also, pay attention to whether there is a reaction when the
price touches the channel. If the reaction is small or absent, there will
be no reversal.

Taking VISHWARAJ as an example, first, we identify the first rebound high

point after the retracement as the supply line A, and then, during the
decline, we find the low point where the volume shifts from supply to
demand, which is the demand line B. We observe the price forming a clear
support after reaching the demand line B and rebounding C, touching the
supply line A. At this point, we observe a significant contraction in
volume. We have mentioned before about the phenomenon of ultra-long
bullish candlesticks accompanied by expanding volume during an uptrend,
indicating a frenzy of buying. This phenomenon tells us that the supply
is entering and starting to absorb the demand. When the price rises again,
we need to start paying attention to the strength of demand because while
market supply is entering, if market demand cannot keep up, the price
will begin to fall.
Let's take a look at the performance of INDUSTOWER when the price breaks
above the supply line. At the time of the breakout, there is a significant
decrease in volume, indicating a reduction in supply. The reduction in
supply forms the basis for stable price increases. If the volume suddenly
increases, the magnitude of the price increase must also increase
simultaneously. Otherwise, if supply exceeds demand in the supply-demand
relationship, market equilibrium will be disrupted. If the supply-demand
relationship is not repaired promptly, the price will immediately
experience a retracement. In the chart of INDUSTOWER, we see that after
the supply-demand relationship is broken, a retracement in price
immediately occurs.