Make the market's structure easier to inspect.

Chan theory is a market-structure framework created by the Chinese writer 缠中说禅. It decomposes price movement into nested components: strokes (笔), segments (线段), and pivots (中枢). The method is descriptive rather than predictive: it classifies what the market has done so that structure can be discussed precisely.

First-type points (一类买卖点) mark the end of a price segment, often confirmed by divergence (背驰) between the final push and the one before it. Second-type points (二类买卖点) occur on the pullback after a first-type point, when the pullback holds without making a new extreme. Third-type points (三类买卖点) form when price breaks away from a pivot (中枢) and then pulls back to its edge without re-entering it.

A 中枢 is an overlapping price range formed where at least three consecutive sub-level price movements overlap. It represents the market's agreed fair-value zone for that timeframe and level. Trends are defined by the direction in which price leaves pivots, so identifying pivots correctly is central to the whole framework.

背驰 compares the momentum of two adjacent same-direction segments, typically using the area under a MACD-style histogram. When the later segment covers less area despite price reaching a new extreme, the push is weakening. It is a warning that a segment may be ending, not a standalone trade signal.

Chan theory is strictly multi-level: a segment on a 5-minute chart is a single stroke on a higher timeframe, and pivots nest inside larger pivots. The level you analyze determines which structures are tradable and which are just noise. Mixing levels, such as trading a 1-minute pivot with daily-chart expectations, is one of the most common mistakes.

No framework predicts prices with certainty, and Chan theory is no exception. It provides a disciplined language for describing structure and locating points where the market must prove itself. Risk management and independent validation remain necessary no matter how clean the structure looks.