Chan Theory Mini Class: Consolidation Divergence, Trend Divergence Patterns, and Profit Levels

This chapter marks the beginning of the Zuimo Classroom. I will keep updating, and it will be all valuable information, helping readers become market steel warriors as quickly as possible.

Structure 1: Consolidation Divergence

Consolidation divergence accounts for 60%-70% of market movements. When consolidation divergence appears at the current level, the maximum profit we can expect when entering at section b is a single move at the sub-level. This is very important to note. Many so-called experts fall victim to this kind of movement.

Structure 2: Non-standard Trend Divergence

Non-standard trend divergence is a very valuable type of movement for traders. Whenever this occurs, if we enter at section c, we can capture a full segment at the current level (green). This is 100% guaranteed profit!

Structure 3: Standard Trend Divergence

The difference between standard and non-standard trend divergence is whether there is a 3rd buy at the large B pivot. This structure appears less often than consolidation divergence, but whenever it does, you can boldly enter at the sub-level 2nd sell position in section c. What you are guaranteed is three consecutive moves up and down at the current level (for an upward trend example). In a downtrend, it’s the reverse order. This is a rare but excellent trading structure—once it happens, it’s like free money.

Structure 4: Expansion Upgrade

This kind of movement is also very common and easily confuses traders. When the peaks and troughs of the large A and large B pivots overlap and the number of segments exceeds nine, we call it a central expansion upgrade. There are two ways to define the new pivot range (yellow and purple). I will elaborate on why and what to pay attention to in future content. For example: if divergence occurs when comparing section c to section a, then when we enter, we can only guarantee a single segment at the current level.

I will share more structures in future content, so stay tuned.