The current market situation, to say it has reached the most difficult stage is not an exaggeration. But veteran traders understand that when the market has been grinded down to the point where everyone has lost patience, enduring it leads to a new round of rising markets.

People often ask me, which exchange will be the next one to have problems? It's really hard to predict that, but when it comes to choosing reliable platforms and avoiding pitfalls, I could talk for three days and nights. Today, let's start with the most classic blow-up case in the crypto world to give everyone a reminder, and then I'll completely break down the DIF trend trading method that our research institute uses daily, using ETH as an example, which is beginner-friendly.

Starting with the collapse of FTX: Always put capital safety first when choosing a platform.

Over the years in the crypto market, the number of exchanges that have gone bust is countless, but the most shocking still remains FTX in 2022. At its peak, it was the second-largest exchange in the world, naming arenas, getting celebrity endorsements, and funding platforms, it was very glorious, but in just a few days, it collapsed dramatically, and countless users' assets went to waste.

On the surface, its processes were the same as all platforms: users deposit coins → trading within the platform → withdrawing at any time. But behind the scenes, it was a completely different story: the assets that users deposited were all transferred privately by the platform to the affiliated hedge fund, Alameda Research, for high-risk investments and to fill financial gaps. Users thought their coins were sitting in their accounts, but in reality, they had long been moved away, and when the wave of withdrawals hit, they couldn't get any money back.

Having been in the industry for over a decade, I went from knowing nothing as a small trader to slowly navigating through pitfalls, witnessing too many cases where greed for small gains led to significant losses. Here is a heartfelt piece of advice: Never store large amounts of money in small exchanges, and don't be blinded by those high-interest financial products and ultra-high returns. While you're eyeing that little bit of interest, they're eyeing your capital.

Now that industry regulations have increased, there is a very simple standard for choosing a platform: Look at whether it dares to publicly show proof of reserve. A platform that doesn’t even dare to show its reserves definitely requires extra caution. Among the compliant leading platforms, Coinbase has now opened new user registrations, as a compliant exchange listed on the US stock market, its reserves are transparent and its qualifications are complete. New users who complete identity verification can receive up to $50 in benefits, with referral code Y8L23JL for those interested.

Let's put the topic of platform safety aside for now and return to market content. Today, I will focus on a trend identification indicator that our research institute frequently uses—DIF, paired with a multi-cycle trading method that is highly practical. Friends who have used it can also share your experiences in the comments section.

DIF Zero Axis Crossover Method: Instantly Identify Major Trends

Many people only look at the golden and dead crosses using MACD, but the most accurate signal is actually the DIF line crossing the zero axis. This is our core basis for judging major trend reversals.

The logic is very simple: the zero axis is the boundary between bulls and bears. When DIF breaks above the zero axis, it indicates that bullish forces are fully dominant, and the major trend reverses upward; when DIF breaks below the zero axis, it indicates that bears are in control, confirming a medium-term downtrend.

Let’s use ETH for practical application, first shifting to the 4-hour cycle.

Now the 4-hour level DIF is firmly above the zero axis, indicating that the major trend is upward. This is the primary premise for all our operations.

Old followers should know that my strategy of "follow the big trend + counter the small trend + seek breakthroughs" was refined together with friends in 2022 after reviewing the markets—three layers of cycles progressively filtering out many false signals:

 

• Look at the overall trend on the 4-hour chart to determine the overall bullish or bearish direction;
• Look at the smaller trend on the 1-hour or 30-minute chart, wait for pullbacks before entering, and avoid chasing highs;
• Looking for breakthroughs on the 5-minute chart, find precise buying points once the pullback ends.

The rationale is quite straightforward: first identify the overall direction, then find high-value entry points in smaller levels, finally confirm ignition with smaller cycle signals, so you don't need to chase after rising and falling prices to get beaten up.

Three-layer cyclic operations: finding buying points from large to small

Step One: 4-Hour Follow the Big Trend, Set Bullish Main Tone

Returning to the 4-hour chart of ETH, since the DIF is running above the zero axis, the clear direction is bullish, so all our operations prioritize going long and should not take heavy short positions against the trend.

A common mistake that many beginners make is fixating on a few minutes of K-lines chasing highs and trading without understanding the major trend, leading to losses without knowing why. If you first settle the 4-hour level, you’ll feel more secure.

Step Two: 1-Hour Counter the Small Trend, Wait for Pullbacks to Re-Enter

Once the general direction is understood, we shift to the 1-hour cycle.

Now ETH on the 1-hour chart is at a recent high, the MACD twin lines are far from the zero axis, indicating a need for a pullback, and this position is definitely not suitable for chasing highs.

What does countering the small trend mean? It means that the major trend is upward, but we do not chase after buying as it rises; instead, we wait for the smaller levels to pull back before positioning. If subsequently, the 1-hour chart shows a pullback, and the twin lines move closer to the zero axis, that will be our entry window.

Conversely, if the 4-hour trend is downward, then we look for shorting opportunities when the 1-hour chart rebounds; the core idea is not to chase highs and strike low.

When waiting for a pullback, how do we predict where the support level is? Here are two practical tools: one is the Fibonacci retracement accessible to everyone, and the other is the chip distribution exclusive to members, which I will detail later.

Step Three: 5-Minute Seek Breakthroughs, Confirm Launch Before Taking Action

Once the 1-hour pullback is in place, we shift to the 5-minute cycle to find precise buying points—that's the idea from macro to micro.

Finding breakthroughs on the 5-minute level can be done stably using EMA moving averages, and here are two options you can choose:

 

• Single Moving Average Version: Watch for EMA52 breakout;
• Dual Moving Average Version: Watch for EMA10 crossing up through EMA40 to form a golden cross.

For example, after the 1-hour pullback creates a recent lower low, if the 5-minute level stabilizes and rises, and EMA10 crosses above EMA40 forming a golden cross, this signals the end of the pullback and the start of a new rise.

At this point, the entire system has come full circle: 4-hour DIF determines the bullish direction → 1-hour waits for pullbacks against the small trend → 5-minute moving averages golden cross confirms breakthrough entry. The resonance of the three signals helps you avoid most false fluctuations, greatly increasing success rates.

Two major auxiliary tools: Accurately pinpointing pullback support levels

1. Free Tool: Fibonacci Retracement, Clear Strong and Weak Supports

Currently, ETH is still rising, having not yet undergone a pullback. I will demonstrate how to use historical data, so when a real pullback occurs later, you can apply it directly.

First, find the Fibonacci drawing tool in the indicators; the straight line and segment logic are the same. Personally, I prefer using the segment.

Drawing lines in a bullish market is very simple:

Step One: Choose the lowest point of this rising shadow as the start point;

Step Two: Choose the recent peak before the pullback as the endpoint.

After drawing, the corresponding horizontal lines represent the support levels, clearly marked by strength levels:

 

• Strong Support: 0.236, 0.382, 0.5. If price holds at these levels, it indicates strong bullish absorption and is a great low-buying opportunity;
• Weak Support: 0.618, falling to this level is considered a deep pullback, which will discount the bullish trend.

In previous trends, ETH stabilized and surged directly after pulling back to the 0.236 level, indicating a very strong bullish trend.

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By the way, the 0.236 level corresponds to the classic cup and handle trading pattern, which interested friends can study further. Also, if combined with the lines and segments from the fractal method, finding highs and lows will be more accurate: starting with peaks and troughs to build segments, then central zones. Once understood, using Fibonacci will be much more seamless.

2. Member Exclusive: Chip Distribution

Members can also overlay the chip distribution tool to see the market's real holding costs, mutually verifying with Fibonacci support, which can help avoid many false supports that lack funding backing, significantly increasing accuracy.

The entire trading method is straightforward—no flashy tricks, with the core being from macro to micro, following trends, waiting for pullbacks, and finding confirmations. With the market being challenging, we must not disrupt the rhythm with frequent operations. First, get the overall direction right, and then wait for high-value opportunities before acting.

Still, the same statement: before trading, always prioritize the safety of your capital, choose reliable platforms, and gradually refine your trading system. When ETH actually undergoes the 1-hour pullback, I will also take everyone through hands-on practice step by step in the live room; those interested can continue to follow along.

Currently, there are live streams every day, so be sure to keep track of the AiCoin community, everyone! Book in advance 👇

https://www.aicoin.com/zh-Hans/live/list?tab=upcoming

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