The Warning Signs Behind the Continuous Rise

This week is destined to be extraordinary. The three trading days at the end of the year have given us enough anticipation with a wave of eight consecutive days of gains, but also hidden enough variables. The bullish momentum is still fermenting, but the fluctuations of the eighth K-line have clearly intensified, and profit-taking sell-offs are emerging—this is the market saying, good things can also go too far. High places are truly cold, and short-term operations must remain calm; the cost of being aggressive could be very heavy.

From an external perspective, the overall market background this week is not entirely optimistic. Last week, several major mainstream coins experienced slight declines, which can be seen as technical adjustments. But this is not a bad thing; on the contrary, it indicates that the market is digesting the previous gains. You will find that market sentiment is actually quite resilient, and the enthusiasm for digital assets has not significantly waned. This brings a bit of warmth to today’s opening. But don’t let your guard down—some hot sectors (such as AI narratives, Layer2 concepts, etc.) experienced quite fierce declines last Friday. Coincidentally, these sectors have been leading the rally during this period, with explosive popularity. Today, the opening pressure on these sectors might push prices higher, so be cautious of being dragged into a trap by external sentiment.

Weekend news is as usual very positive, with frequent good news. Coupled with the momentum of eight consecutive days of gains, today’s early trading will likely leverage this inertia and fermentation effect, opening high or continuing to surge. People are emotional, and the market is even more so; positive news over the weekend can easily catalyze impulsive emotions at the Monday open.

But the key lies in this "but"—

The "fatigue" behind the eight consecutive days of gains is accumulating. After eight days of continuous rise, the index’s gains are already quite substantial, approaching an important psychological and technical level. The profit-taking in the market is enormous! At this point, many funds are contemplating "taking some profits," or withdrawing from high-level hot spots with large gains, and flowing into low-level sectors that haven’t risen much yet—this is called "high-low switching." So if you see hot sectors surge and then quickly differentiate or even fall sharply, don’t be surprised, and don’t rush to buy the last hot potato.

Last Friday’s volume increase hinted at divergence. An increase in volume is a positive signal, indicating new funds are entering. But when volume expands at high levels, especially after a continuous rise, it often means divergence is intensifying—some are buying frantically, while others are taking the opportunity to sell, and the market is playing a game. If today continues to see volume increase but the index struggles to advance, or if the main contribution comes from large-cap coins dragging the index, then caution is warranted. Relying on weight-driven "stimulants" to forcibly push higher usually signals the end of a strong move, and can easily trigger profit-taking sell-offs, leading to sharp volatility or even a short-term top.

The psychological pressure is real. A certain integer level is not just a number game; it’s an important psychological defense line and technical resistance for investors and large institutions. The closer to this level, the more cautious the market becomes, and the greater the selling pressure. Trying to break through in one go? It requires extremely strong fundamentals or massive capital support, which currently seems quite difficult.

Considering these four factors—fatigue from eight days of gains, divergence from volume at high levels, psychological resistance, and pressure on hot sectors—when combined, the probability of sharp fluctuations and pullbacks during today’s trading session is very high. In this market environment, the core principle of operation is just one word: "stability"!

Don’t be driven by impulsive emotions at the open. Be especially cautious with hot coins that have already soared continuously—avoid becoming a "bagholder."

A gentle pullback isn’t necessarily a bad thing. If there is an orderly correction during the session, with controlled volume (not panic selling), it can actually provide an opportunity for high-quality assets with solid fundamentals and ongoing trends to reverse and re-enter. But this depends on whether the pullback is a healthy adjustment, not a passive retreat after false surges in weighty coins.

The key is to monitor changes in volume and market structure. Is the volume-price relationship healthy? Is the market still generating profit opportunities? Is it a benign rotation or a false prosperity driven by weight? These are far more important than simply watching the index’s percentage gains or losses.

In the final sprint at the end of the year, maintaining a stable mindset is more valuable than anything else. We don’t need to chase the thrill of last-minute gains; a steady and safe closing, and entering the new year peacefully, is the best strategy. Today, let the market perform first; we just sit tight and watch carefully, and talk later.