Lesson Three "Positioning — Confirm the Trend, Find Entry Points, Support and Resistance to Decide Buy/Sell" has ended.

Two hours of course content, very dense information. I know some parts may still need your digestion.
This letter is to help you clarify the core points from today, and also to share some personal thoughts with you.

1. Why do we need a dedicated discussion on "Positioning"?
Before talking about positioning, we have already learned two lessons: the first on candlestick recognition, and the second on trend structure.
With candlestick patterns and trend analysis as foundations, you should theoretically be able to judge market direction.
But many students have feedback like: "Teacher, I clearly see the right direction, why am I still losing money?"

The answer to this question is the main theme of today’s course — the problem lies in positioning.

Seeing the right direction is just the first step in trading.
Direction determines whether you go long or short, but the specific entry point, stop-loss level, and take-profit level are what ultimately decide the profit or loss of a trade.
The accuracy of trend judgment might only be around 60%, but if you can achieve a risk-reward ratio of 2:1 or higher (even 3:1, 5:1) in your positioning, then even with a win rate of only half, you can maintain stable profits over the long term.

This is the value of positioning: it’s not about turning a correct trend view into a wrong one, but about earning more when right and losing less when wrong.

2. What exactly did we learn today?
1. The essence of positioning: Support and Resistance
The core is to find the "key price levels" in the market — those prices that have been repeatedly blocked or supported.
These levels are critical because they represent the collective memory and behavior of market participants.

Support levels: areas where buy orders intervene during a price decline.
Identification methods include previous lows, volume clusters, moving averages, trendlines, and round numbers.

Resistance levels: areas where sell orders suppress price during an upward move.
Identification methods include historical highs, gaps, Bollinger Band upper bands, chip concentration peaks, Fibonacci retracement levels.

The most important concept is the dynamic conversion between support and resistance:
When a resistance level is effectively broken, it becomes support;
when a support level is effectively broken downward, it becomes resistance.
This conversion mechanism is the core basis for judging whether a trend will continue or reverse.

2. Positioning strategies under different trends
Different trends require completely different positioning strategies.
Never short in an uptrend, never go long in a downtrend — this sounds obvious, but many still do it.

Uptrend: the only correct approach is to go long.
But don’t chase the top; the right method is "go with the big trend, against the small trend" — wait for a pullback to support levels (Fibonacci retracement, moving averages, previous highs/support), and enter when a stabilization candlestick pattern appears.

Downtrend: the only correct approach is to go short.
Don’t chase the short; wait for a rebound to resistance levels, and enter when a momentum slowdown candlestick pattern appears.

Range-bound trend:
Don’t chase the top or bottom; instead, buy at the lower boundary and sell at the upper boundary.
The biggest trap in ranging markets is false breakouts — prices briefly break out of the range then return; don’t chase these.

Trend reversal period:
The most important thing is not rushing to enter, but waiting for confirmation.
For example, after a head and shoulders neckline breaks, there’s usually a rebound back to the neckline — that rebound is the best shorting opportunity.

3. Top and bottom reversal techniques
Many want to learn "bottom fishing and top escaping," but my view is:
Precise tops and bottoms are only achievable by experts, but recognizing top and bottom zones is learnable.

Five signals of bottom reversal:
Volume expansion, long lower shadow candlesticks, divergence between price and indicators, moving average convergence, bottom formations (double bottom, head and shoulders bottom).

Five signals of top reversal:
Volume-price divergence, long upper shadow candlesticks, divergence at the top, moving average death cross, top formations.

Remember: divergence at the top or bottom is a warning; only act when the pattern is complete.
Don’t jump in at the first signal — wait for confirmation, wait for confirmation, wait for confirmation — say it three times.

4. The five-step positioning method
This is our most important practical tool today, and I recommend you keep it on your screen:

Set the trend: confirm trend direction (4-hour, daily, weekly charts, moving averages, MACD, trendlines verified multiple ways).
Find levels: mark key support and resistance levels (previous highs/lows, Fibonacci, moving averages, volume clusters).
Wait for signals: after price reaches key levels, wait for candlestick confirmation (hammer, engulfing patterns, etc.) and volume.
Set risk control: place stop-loss outside key levels (with a fixed ratio not exceeding 2% of total capital), check if risk-reward ratio is above 2:1.
Execute: open position, dynamically track, move stop-loss as price moves in your favor to protect profits.

This process connects all the knowledge points from Lesson One to Lesson Three.
It’s not some secret "trick" from a teacher, but a standardized process that professional traders execute daily.

3. The three most common mistakes in positioning
Based on my years of observation and experience coaching students, the top three mistakes are:

First mistake: Treating a key level as a precise line.
Support and resistance are zones, not points.
Prices can’t bounce exactly on your drawn line every time; they might be off by dozens of points (Ethereum), or hundreds (Bitcoin).
Accept this fluctuation — don’t doubt yourself just because the price doesn’t hit your line exactly.

Second mistake: Entering before signals appear.
Many buy immediately when price reaches support, without waiting for candlestick confirmation.
The result might be the price consolidates near support for a long time, or briefly breaks support, trapping your order.
Remember: reaching a key level is necessary but not sufficient — wait for candlestick confirmation.

Third mistake: Setting stops too tight.
Fearing losses, some set stops very close inside key levels.
Normal fluctuations then knock you out, and the price moves as expected afterward.
Stops should be placed outside key levels, leaving enough buffer.
Using ATR to dynamically set stops is a good method.

4. Post-class homework and next lesson preview
Today’s homework:
Drawing practice: open your trading software, on daily and 4-hour charts, mark all support and resistance levels for Bitcoin and Ethereum — previous highs/lows, Fibonacci, moving averages, volume clusters.
Review practice: analyze the past week’s market, find at least three cases where candlestick signals appeared at key levels, and consider how your five-step method would have performed.
Simulation practice: over the next three days, use the five-step method to identify at least one trading opportunity each day (can be simulated), and record your decision process and results.

Next lesson, we will move into the fourth part of building a trading system — stop-loss and take-profit.
The importance of stop-loss and take-profit cannot be overstated.
Many people don’t lack the ability to make money, but they can’t "protect profits."
You might ask: why dedicate a whole lesson to stop-loss and take-profit?
Because it’s too important, and the techniques are more complex than you think.
In the next class, you will learn: fixed ratio stops, technical level stops, trailing stops, time-based stops, dynamic ATR-based stops, partial profit-taking, risk-reward optimization…
These are key skills to turn occasional profits into consistent gains.

Please prepare your trading journal template in advance; we will do real case exercises next lesson.

5. Final words
Fellow crypto enthusiasts, after three lessons on building a trading system, you should already feel:
Trading is not guessing market moves by intuition, but a logical, systematic, disciplined process.
Candlesticks teach you to understand market language, trend analysis helps you judge the big direction, and positioning helps you find high-probability entry points.
Together, these three pieces make you better than 90% of the market.

But I must be honest: knowing is not the same as doing.
You understand, but that doesn’t mean you can execute.
Real progress comes from daily review, practice, and self-correction.

I hope you keep this letter and read it repeatedly over the next week.
Write down the five-step method and put it somewhere visible.
Before each trade, ask yourself:
Is my trend setting correct?
Is my positioning right?
Have I waited for signals?
Have I set my risk controls?

Good entry points are made by waiting, not chasing.
Remember this — it will help you avoid most traps.

I am Wang Yibo, and this is Yibo Talks Crypto.
See you in the next lesson — stop-loss and take-profit, don’t miss it!

Wishing everyone long-term success and smooth trading!