Rhythm Control During Central Oscillation

Today's Topic: Operation Logic of Central Oscillation

After the formation of the central zone, the trend enters a oscillation phase. This is the most common trend pattern in Chan Theory, and also the moment to test traders' resolve.

The essence of the central zone is that the bulls and bears reach a temporary balance within a certain price range. This balance will not last forever, but until it is broken, the trend will repeatedly oscillate within the central zone.

Key cognition: Central oscillation is not noise, but part of the structure.

Every central zone is accumulating energy for the next move. Understanding this point prevents you from losing direction during oscillations.

Chan Theory Practical Tips: The Three Boundaries of Central Oscillation

In central oscillation, there are three key boundaries that need to be clearly identified:

1. Central Zone Range (ZG-ZD)

This is the core area of the central zone and the main activity range of oscillation.

• ZG (Central Zone High Point): The upper boundary of the central zone
• ZD (Central Zone Low Point): The lower boundary of the central zone
• GG/DD: Extended high/low points of the central zone, used to judge whether the zone is extending

Operational meaning: When the price is within the central zone, observe without rushing to make a statement. The real opportunity appears when the boundaries are tested.

2. Testing of the Central Zone Boundaries

The upper and lower boundaries of the central zone are the touchstones of trend strength.

• When the price touches near ZG: observe if selling pressure appears, or if a top pattern forms
• When the price touches near ZD: observe if buying support appears, or if a bottom pattern forms

Key point: Do not rush to act when the boundary is tested for the first time. The most effective signals often appear during the second or third test, accompanied by a clear change in strength.

3. Breakthrough and Confirmation of the Central Zone

The central zone will eventually be broken, but a break does not necessarily mean validity.

Three conditions for a valid breakout:

1. Strength: The strength of the breakout candle or segment is obviously stronger than the normal candles during oscillation
2. Retest: After the breakout, is there a retest? A retest that does not break the boundary is an important confirmation of a valid breakout
3. Volume (auxiliary): When combined with volume analysis, a valid breakout usually accompanies increased volume

Warning: Fake breakouts are very common during central oscillation. Breakouts without retest confirmation should be approached with caution.

Market News

1. Federal Reserve Interest Rate Decision Approaching

The Fed's interest rate meeting will be held next week. The market is generally concerned about whether the rate policy will be adjusted, and the Fed’s latest statements on inflation and employment. Historical data shows that market volatility usually increases before and after the rate decision announcement.

2. PMI Data from Major Economies to be Released Sequentially

From this weekend to next week, several major economies will release manufacturing PMI data. PMI, as a leading indicator of economic activity, can provide the market with reference information on economic fundamentals.

Mindfulness Reflection: Oscillation as Practice

Central zone oscillation is not only a lesson in technical analysis but also a spiritual practice.

During oscillation, people's greed, anger, ignorance, arrogance, and doubt are amplified. Watching the price go up and down without clear trading opportunities, this state of "doing nothing" is the hardest to endure.

Common mistakes traders make: Forcing trend-following during oscillation, or operating blindly in unstructured areas.

Truly mature traders know how to stay calm during oscillation. It’s not about inaction, but about not acting rashly.

There is a Zen saying: “Eat when hungry, sleep when tired.” Trading is the same—act when the structure is in place, wait when it is not. Those "seemingly operable" moments are often traps.

Remember: Waiting is not passivity, but respect for the structure.