Leaving level = reset to zero

Today's Topic: The Essence of Recursive Levels

In Chan Theory, levels are the key to understanding market trends. Many people studying Chan Theory get stuck on the word "level" — even on the same K-line chart, why do some say 30-minute level, others say 5-minute level? Which one is correct?

Answer: Both are correct, and both are not correct.

The essence of levels is not the K-line period, but the hierarchy of the central zones.

The Starting Point of Recursion

Chan Theory defines the recursive rules for levels:

f1(a0)=a1 — A segment is the basic unit that forms the smallest level's central zone
f2(an-1)=an — Lower-level trend types combine to form higher-level central zones

The key here is: Levels grow recursively, they are not manually defined.

The segments you draw on a 1-minute chart form the 1-minute level central zone; the overlap of three 1-minute trend types forms the 5-minute level central zone; the overlap of three 5-minute trend types forms the 30-minute level central zone...

Common Misconceptions

1. Equating K-line periods with levels — A 30-minute K-line chart does not equal a 30-minute level, it’s just a perspective
2. Jumping levels to view charts — Jumping directly from 1-minute to daily charts creates gaps, making recursion impossible
3. Ignoring interval nesting — Failing to position from higher levels and precisely target lower levels

Levels are like growth rings in a tree, expanding layer by layer. Understanding recursion allows you to read the "age" of the trend.

Practical Tips in Chan Theory: Confirming Levels with Three Buys and Three Sells

The key to divergence detection is comparing within the same level. Many fail at divergence judgment because they compare segments of different levels.

Correct Approach

1. Identify the level: First clarify which level you are operating on (e.g., 30-minute)
2. Locate the central zone: Confirm the position of the central zone at that level
3. Compare internal structures: The entering and leaving segments must be of the same level
4. Interval nesting verification: Find divergence points at smaller levels

Typical Errors in Level Confusion

• Using a 30-minute exit segment but internal structure is a 5-minute divergence
• Extending a central zone as if it’s a new central zone, misjudging the level
• Ignoring the completion of trend types and prematurely judging reversals

Mnemonic: If level is uncertain, divergence is invalid.

Market News

Tech stocks dominate half of A-shares market value

As of June 18 close, among the top ten A-share market caps, five are tech stocks, including CATL, Foxconn Industrial Internet, Zhongji Xuchuang, Cambrian, and Xinyisheng. This marks a historic shift in the A-share market structure, with tech powerhouses for the first time in over 30 years rivaling traditional finance and energy sectors.

HKEX to launch RMB government bond futures

Hong Kong Securities and Futures Commission announced that HKEX plans to launch five-year RMB government bond futures on August 3. This aims to enrich international investors’ risk management tools, enhance the attractiveness of RMB assets, and strengthen Hong Kong’s position as an offshore RMB hub. By the end of May, foreign investors held about 2 trillion yuan in Chinese government bonds.

Mindful Reflection

Trend is like water; levels are like rivers.

A river has mainstreams, tributaries, and whirlpools. Standing on the bank, you see a line; riding a boat, you understand its depth.

Trading is the same. The K-line chart is a map, levels are the scale. The larger level shows direction; the smaller levels find turning points. If the scale is wrong, you’ll never reach your destination.

Many obsess over "precise prediction," but forget that the essence of trend is growth. Recursive levels are not mechanical stacking but organic evolution. Like life, from cells to organs, from organs to systems, progressing layer by layer, interconnected.

Let go of obsession, see the structure clearly. Levels are not shackles but ladders to freedom.

Zen without measurement · Certify Zen through Chan