📝 Post-Class Summary | Position Selection—Identify Entry Points After Determining the Trend; Use Support and Resistance to Decide Buys and Sells

Dear crypto friends, that concludes today’s third lesson. Let’s take a few minutes to quickly review the key content from tonight.

I. What Is Position Selection?
The trend determines the direction; position selection determines buying and selling.

Trend analysis solves the question of “where it is going,” while position selection solves the question of “where to buy and where to sell.” Even if you get the direction right, you can still lose money if you choose the wrong price level. Position selection means finding the most favorable entry and exit points within a trend.

II. Support and Resistance—The Basic Tools for Position Selection
Concept Meaning Common Locations
Support level A level where the price may stop falling and rebound (the floor) Previous lows, moving averages, trendlines, round-number levels, volume concentration zones
Resistance level A level where the price may encounter resistance and pull back after rising (the ceiling) Previous highs, moving averages, the upper Bollinger Band, Fibonacci levels, chip concentration peaks
The most important rule:

When support is effectively broken → it becomes resistance; when resistance is effectively broken → it becomes support.

Three criteria for an effective breakout: a solid candlestick body + increased volume + retest confirmation (a wick alone does not count).

III. Position Selection Strategies for Different Trends
Uptrend: Go long when the price pulls back to support (Fibonacci 38.2%-61.8%, MA20, previous highs turning into support)

Downtrend: Go short when the price rebounds to resistance (Fibonacci retracement levels, MA20, previous lows turning into resistance)

Range-bound trend: Go long near the lower boundary and short near the upper boundary—avoid breakout trades, as most breakouts are false

IV. Identifying Tops and Bottoms—Signals of Trend Reversals
Bottom signals: Long lower wick, high-volume bullish candle, MACD bullish divergence, converging and flattening moving averages, neckline breakout of a double bottom/head-and-shoulders bottom

Top signals: Long upper wick, price-volume divergence, MACD bearish divergence, bearish moving-average crossover, neckline breakdown of a double top/head-and-shoulders top

Top and bottom signals are “warnings,” not “trade entry instructions.” Wait for confirmation signals before taking action; do not jump the gun.

V. Six-Step Position Selection Process (Core!)
Determine the trend: First examine the direction on larger timeframes and select positions in line with the broader trend

Draw key levels: Mark previous highs and lows, moving averages, Fibonacci levels, trendlines, and round-number levels

Find confluence zones: Multiple timeframes pointing to the same level → highest validity

Wait for a signal: When the price reaches a key level, wait for candlestick confirmation (hammer, engulfing pattern, etc.)

Calculate the risk-reward ratio: The risk-reward ratio should be at least 1:2; otherwise, the trade is not worth taking

Set a stop-loss: Set a stop-loss when entering; exit immediately if the level is broken

VI. Remember These Three Sentences
Determining the trend means looking up to see the road; position selection means choosing where to place your feet.

Position is more precise than direction, and entry is more important than simply getting the direction right.

Support and resistance are the map for position selection, while candlestick signals are the instructions for entering.

🎯 Post-Class Assignment
Open a candlestick chart and mark all important support and resistance levels in the current price movement

Find at least 3 “multi-timeframe confluence” levels (multiple timeframes pointing to the same level)

Review your most recent 10 trades and analyze whether the entry points were at valid support and resistance levels

Next Lesson Preview
Lesson 4—Take-Profit and Stop-Loss: Let Profits Run and Keep Losses Under Control. After learning position selection, we will learn how to exit, protect profits, and control risk. Build a complete “entry → holding → exit” trading loop.

Wishing all crypto friends successful trading!