The highest realm of technical analysis

In the early 1990s, Hong Kong had a very popular TV drama called “The Great Times,” which depicted the ups and downs of the stock market. The protagonist, “Fang Zhanbo,” relied on his market intuition and dominated the capital market. In the stock market, he would suddenly feel that something was wrong, and with his intuition, he would avoid major crashes each time. Before Hong Kong’s most severe stock market crash, Fang Zhanbo felt a strong discomfort internally, but he couldn’t understand why, so he withdrew all his stocks and ended up avoiding the disaster.

In many people’s view, this feeling is called market intuition, or the sixth sense—men’s sixth sense. They don’t know why, but they just feel something is wrong or uncomfortable. The TV drama conveyed that the opposing trading parties, including Ding Xie, didn’t rely on fundamental analysis or technical analysis; instead, they all depended on a strong sense of the market, which helped them accumulate enormous wealth. This made market intuition a key factor in determining trading success or failure.

Perhaps because this TV drama was so popular and influenced generations of Chinese traders, most traders entering the trading world talk about market intuition constantly. They pursue, worship, and mystify it, enthusiastically discussing it and longing to have a “gut feeling” that tells them at a glance whether prices will rise or fall, calling it “the highest realm of trading.”

At the end of 1990, when I just entered the stock market, some “veterans” would tell me earnestly, “When you look at the market and instantly know whether it will go up or down, but can’t explain why, then you’ve reached the highest realm.” So, as a young person, I admired those who could profit without knowing why or being able to articulate reasons, thinking they were masters and that was the goal I should pursue. Therefore, I kept watching the market charts, hoping to gain such intuition, such market sense. But after a few years, I found that sometimes my feeling was right, sometimes wrong. It seemed I could never truly acquire this mysterious intuition, and I couldn’t make much money. Meanwhile, those so-called masters with this market sense often ended up losing everything.

A few more years later, after some growth and reflection, I finally understood some principles.

What exactly is market intuition?

Market intuition is not a gut feeling or sixth sense. If you trade based on feelings, that is subjective and emotional trading—just guessing blindly. Market intuition is a trading rule or market phenomenon that is not explicitly stated or easily summarized. It is a framework unconsciously distilled from long-term short-term trading. When this signal appears, you immediately know what to do. It is the ability of the brain to instantly process a series of complex, subtle information and draw relatively reliable conclusions without conscious thought—that is market intuition.

A small part of the rules cannot be quantified, which leads to the inability to clearly explain them, thus existing as market intuition.

We all know that in basketball, some players are very accurate at shooting three-pointers. If you ask them how they shoot, they will say, “Just like this,” but they can’t explain it clearly. The unexplainable part includes the shooting force, shooting posture, jump height, or which hand starts the shot. They can tell you a rough framework—things everyone knows and can easily find out, like standing upright, turning around, staring at the basket. But knowing these broad aspects is easy; it’s still not enough because you still miss shots. For these quantifiable aspects, no one can explain them clearly because each person’s height, jumping ability, and hand strength differ, affecting the shooting force and jump height, which cannot be quantified.

The feeling of shooting a perfect three-pointer doesn’t come out of nowhere. To make a three-pointer, you need continuous practice, exploration, and summarization. You shoot high this time, slightly lower next time; shoot low, then higher next time. Countless training sessions and a process of continuous integration form a personalized shooting sense suited to your body, strength, and style.

From this, we see that market intuition is an inability to clearly express, explain, or quantify trading rules or market phenomena. However, for most people, if they conduct in-depth analysis, summary, and refinement, most trading rules or market phenomena can be distilled and summarized. The so-called inability to explain or clarify mainly results from insufficient summarization, refinement, review, or laziness.

Any skill is a science. Science emphasizes rigor. It insists that 1 + 1 equals 2, not 3. If you are a lawyer well-versed in the law, you will know how to handle a case and what sentence the criminal should receive. If you are a mathematician, you naturally know how answers are calculated, and answers are unique. When others know the calculation formulas, their answers will inevitably match yours.

But trading cryptocurrencies is not a science; it is an art. There are no fixed answers in crypto trading.

Over the past few years, I have delved deeply into technical analysis. Initially, I loved showing off my knowledge of technical analysis. When talking about stocks with friends, I could speak eloquently, discussing price, volume, time, space, weekly charts, candlesticks, leaving my friends stunned. But now, I no longer discuss stocks with anyone. When friends ask me about technical analysis, I tell them I don’t understand it.

What is the essence of technical analysis? Have you ever thought about it? My current understanding is: all other techniques are objective, but technical analysis in digital currencies is human-made. Who are your opponents? Invisible main forces. Sometimes, they buy when MACD shows a golden cross, causing prices to rise; other times, they create a false MACD cross to trap you. What is the most fascinating part of digital currencies? Their uncertainty. The highest level is a sense of market intuition, a forward feeling about the market. When you encounter a technical pattern you’ve learned, you can sense whether the main force is following the technical signals or operating in reverse, and you can feel the main force’s thoughts and movements behind the market.

However, many people are just following rigid formulas, which are exploited by the main force in reverse. Therefore, in crypto trading, only a very small number of people make money—always.

Of course, I don’t always have market intuition, nor am I always right. After all, I am human, not a god. So I set a rule for myself: if I make a wrong judgment, I will exit immediately if the price drops 2%.

In recent years, I have studied stocks and Bitcoin every day. It might be hard for you to understand what that feels like. Watching the monotonous candlestick charts day after day, repeating the same process—it’s an extremely boring, disgusting, and nauseating feeling.

I feel like I have come out of hell. Only after experiencing that hellish training can one develop a market sense. And such market intuition is rare, very rare. The less common it is, the more accurate and precious it becomes.

Now, I rarely look at stocks or Bitcoin, and I never discuss technical analysis with friends. If someone is very confident and proud of their technical analysis, I want to say: you are still far from true technical analysis…

Mastering technical analysis to the deepest level fills me with profound awe for this ever-changing, unpredictable market.

**$NFT **$SOL **$ADA **