What is a deviation from the moving average? The phenomenon of moving average deviation is often encountered in practical operations, which is very helpful for seizing short-term opportunities. The so-called moving average deviation refers to two situations:

When the stock price falls to the bottom and rises from the bottom, the direction of the medium - to long-term moving average is generally downward. When the stock price breaks through a moving average, the direction of the stock price's movement crosses and is opposite to the direction of the moving average it breaks through, which is called moving average deviation.

2. Another situation is that when the stock price rises to its peak and then rapidly falls, the direction of the medium - to long-term moving average is still upward. When the stock price quickly breaks through a medium - to long-term moving average, the direction of the stock price is downward, and the direction of the broken down moving average is indeed upward. The direction of the stock price and the broken down moving average also "cross" and are opposite, which is also a phenomenon of moving average deviation.

The phenomenon of deviation from the moving average generally occurs during a sharp rise or fall, and it is very helpful for judging the bottom and top. The stock price has a pulling force on the moving average, while at the same time, the moving average also has an attractive force on the stock price. The direction of the stock price and the moving average crosses and deviates, which is an abnormal market state and a short-term behavior. Due to the attractiveness of the moving average, this phenomenon will be corrected. At the same time, since the moving average largely represents the direction of a trend, and the formation of a trend is the result of multiple factors, the trend will correct the stock price that deviates, resulting in a rebound or correction. This method is very effective for judging the short-term bottom and top.

　　Technical characteristics of moving average deviation:

(1) Appears after a sharp rise or fall, when the stock price or index quickly rebounds or rebounds.

(2) The deviation from the moving average can be the deviation between the stock price or index and the moving average, or the deviation between moving averages.

(3) The stock price or index, moving average, and moving average intersect with each other and move in opposite directions.

The deviation from the moving average can also be summarized into the following three points.

(1) Only appears after the sharp rise and fall of the market.

(2) The current trend of the stock price or index crosses the moving average and runs in the opposite direction.

(3) The shorter period moving average intersects with the longer period moving average and runs in opposite directions.

After a rapid decline in stock price or index, rebound and cross the moving average. At this point, the direction of the moving average is still downward, and the stock price or index crosses the moving average in reverse, forming a deviation from the moving average, also known as a bearish deviation from the moving average.

When the stock price or index rises rapidly, it retraces and crosses the moving average downwards. At this point, the direction of the moving average is still upward, and the stock price or index crosses the moving average in reverse, forming a deviation from the moving average, also known as a bullish deviation from the moving average.

　　The bearish deviation of the moving average (bottom moving average deviation) is the entry point for short-term trading.

The faster the stock price or index falls, the faster the rebound; The stronger the downward trend. The steeper the angle of decline. The larger the angle of recovery, the higher the magnitude of recovery. The deviation from the moving average basically occurs after a sharp drop or surge, so the bottom moving average deviation is the entry point for short-term trading.

The bottom of the entry can be the bottom formed by the mid-term decline of the stock price or index, or the bottom formed after a long-term decline. Generally, it cannot be the bottom formed after a short-term decline. Because the bottom of the short-term decline is likely only a part of the mid-term rebound, it is unknown whether the market will continue to rise in the future. Even if it rebounds upwards, it is often a flash in the pan, and any hesitation can lead to being trapped.

Even if the bottom is formed after a medium to long-term decline, it is not advisable to stay for a long time after entering the market, as it is unknown whether there will be a reversal of the moving average.

So the entry principle for moving average deviation is fast in and fast out.

It should be noted that the bearish deviation of the moving average is mostly not the entry point for trend trading, but only serves as a short-term rebound point for people. The term 'bear' is also increasing the limit for traders entering the market, and the so-called bottom is mostly just a rebound bottom.

　　Attention should be paid to the following issues when using moving averages to deviate:

1. The K-line of the stock price must intersect with the moving average and be in opposite directions. If the stock price does not intersect with the moving average, even if their directions are opposite, it does not constitute a deviation from the moving average.

2. When judging the short-term bottom and top after a deviation from the moving average occurs, it should be noted that the stock price must experience severe fluctuations in order to be reliable. If the stock price does not experience severe fluctuations after the deviation from the moving average, but instead experiences strong consolidation or resistance to decline, it indicates that the market is ignoring the deviation from the moving average and the original upward or downward trend will continue. For example, in early March of this year, Vanke's stock price crossed and deviated from the 120 day moving average after breaking through it. However, at this time, its stock price entered a control state at a high level, oscillating upwards in a small yin and small yang manner. Despite the deviation from the moving average, the stock price did not experience severe fluctuations. Therefore, the deviation from the moving average is no longer applicable because the stock price entered a "super strong state" after entering control, and the phenomenon that occurred at this time belongs to another moving average state - "moving average reversal". We will discuss the issue of "moving average reversal" with everyone later. For example, after the Shanghai and Shenzhen stock markets broke through their peak in July and August 2001, there was also a short-term "moving average deviation" phenomenon. However, what the market later experienced was resistance to decline below the moving average to repair the deviation, indicating that the market had entered an "extremely weak state". In this situation, moving average deviation techniques cannot be used, and the moving average state at this time also belongs to a "moving average reversal" situation.

3. The technique of moving average deviation is only applicable to markets in general conditions. When the market enters an "extremely strong" or "extremely weak" state, the "moving average reversal" theory should be used to judge the overall trend. There are two types of market conditions at this time:

A， Extremely strong market. At this point, there is a continuous release of huge amounts that break through the moving average and deviate from it. After the breakthrough, the stock price is consolidating strongly at a high level and refusing to make a correction. The key factor in judging this phenomenon is the "continuous" release of huge amounts, and the "continuous" trading volume is very important.

B， Extremely weak market. At this point, there is an endless resistance to the continuous decline after breaking through the moving average, and the stock price is unable to rebound. Even if the stock price temporarily stabilizes, it cannot enter the market to compete for a rebound, because the stock price is passively waiting for the moving average to fall halfway down the mountain, which belongs to the passive repair of the moving average. Once the moving average above falls, the stock price will still break through and fall.