In what order should you read a BTC chart?
When you see that BTC has just broken above the previous high, do you think first, “It’s a breakout—follow along,” or do you first check where it ultimately closes?
This time, Uncle Kong will use a real market segment from August 2026 to go through it with you from start to finish. The goal is very simple: after watching, you’ll be able to take another chart, and ask yourself questions in order.
The order of the first chapter and first section of Meng Hongtao (Wyckoff trading method) is: background, price-volume patterns, the nature of the pattern, conclusions or forecasts, and only then measures and actions. Describe first, then explain, and only then decide how to respond.
Step one: Look at the background—where did it go?
First, look at the 4-hour chart, and shift your focus from the far right to the left.
Price first rose to A at 81,270.5, then pulled back and moved upward again. At B on the far right, it came back near the previous high once more. This is the background for this observation: price is trying to move past the area in front of it where it previously couldn’t keep climbing.
Notice that we’re describing the structure over these days in the chart, and we’re not declaring that the entire market has entered a bull market based on this.
This is a set of after-the-fact teaching examples. The analysis is unified and stops at 2026-08-28 12:00, using only the already-closed data up to that point. Seeing structure on the 4-hour chart and details on the 1-hour chart is the teaching plan for this series.
Step two: Look at price and volume—what exactly happened?
For the 4-hour K-line at point B: it opened at 80,208.9, had a high of 81,500, and closed at 79,783.3. It did exceed the previous high, but the close fell back below the previous high and was also lower than its own opening price.
This成交 volume is about 394,000 BTC, roughly 3.95 times the previous one. However, in the chart there are volume bars higher than this, so “higher than the previous candle” doesn’t automatically mean “a rare huge volume.” Make the comparison reference clear.
Then use the hourly chart to look at the process.
The 9:00 hourly K-line reached 81,500; the 10:00 one closed at 79,888.1; the 11:00 one closed at 79,783.3. So, you’ve seen both “hitting a new high” and “not holding after making a new high.”
Up to here, don’t label it “bull trap” or “distribution”—just record the price levels, positions, and volume.
Step three: Look at the nature—are these changes strong or weak?
“Nature” sounds abstract, but it’s really asking: compared with the background just now, how did it perform this time?
Since price is challenging the previous high, the key isn’t only how high it touched; you also have to see whether the rise was preserved to the close. This time it made a new intraday high, but closed back below the previous high, which shows this upward push didn’t hold onto its advantage.
This adds one more layer of support compared to directly saying, “Long upper wicks are a sell signal.” First we know it happened near the previous high, then we explain this particular K-line.
But “this upward push is relatively weak” still doesn’t mean “it will definitely go down later.” The hourly chart explains the process—it doesn’t reveal the future for us.
Step four: Draw the conclusion—at the position allowed by the evidence
At this moment, you can write: “Price attempts to break above the previous high, but it fails to hold through the close of this 4-hour candle; the breakout has not yet been confirmed.”
Don’t write directly: “The main force has finished distributing, so it must go down next.” The original book discusses dominant capital with CM, but our K-line has no “trader identity.” 39,4000 BTC is also trade volume, not the amount the main force net sold.
Step three is judging the strength/weakness of this move; only in step four do you combine the background and evidence to give a limited assessment. Don’t turn both steps into “I’m bearish.”
Step five: Make the decision—when you look at the chart next time, what should you check?
For this lesson, don’t place an order yet—two observation tasks are enough.
First, if it later closes back above 81,270.5, then reassess whether the subsequent pullback can remain above it. If these changes appear, you must re-evaluate this relatively weak performance—you can’t treat it as resistance forever.
Second, if it continues to pull back, observe whether it breaks below the low of this K-line at 79,659.2, and at the same time compare the size of the drop, the K-line range, and the trading volume. Breaking it means the pullback continues; it doesn’t automatically equal a short signal.
These two price levels are observation markers for this case, not the specific trading formulas prescribed by the original book. Waiting can be an action, but you need to know what you’re waiting for.
Next time you open the K-line chart, try writing five sentences in order: Where is it? What happened? How is the strength/weakness? What can you judge now? What should you wait for next? Write these five sentences clearly first, then think about trading.
Leave a short exercise:
Some people only look at the high of 81,500 and say, “The breakout has already succeeded.”
From the chart, find two facts, then write one conclusion you think can currently hold true.
Welcome to write your reasoning in the comments—don’t just answer “up” or “down.” The reference explanation will be added to this post’s comment section later.
On the trading road, Uncle Kong is growing with you.