Dear friends, we often hear the term 'reversal' in the stock market. So how can we identify signals of reversal? Many friends are asking what we should do after the change of ownership? In this regard, Laotie would like to share its views with you during the holiday and hope it will be helpful for your investment.
To be honest, it is not difficult to identify signals of market changes. Before a market change occurs, there will always be some warning market characteristics. For example, there are the following characteristics:
1. The stock continues to form a narrow range oscillation and consolidation trend within a certain range, in a dilemma of up and down, with limited room for both rise and fall.
2. In terms of K-line morphology, the K-line is relatively small in size, often with multiple or continuous small bearish and bullish lines, and often exhibits a cross star trend between them.
3. The stock prices of most individual stocks remain calm and lack the potential for significant profit fluctuations.
4. Incremental funds hesitate to enter the market, and trading volume tends to shrink significantly with occasional volume fluctuations.
5. The market sentiment is scattered, and investors have a strong wait-and-see atmosphere.
So the question comes, many friends will ask: Is it an upward or downward rotation? Laotie believes that whether the result of the change is an upward breakthrough or a downward breakthrough depends on a variety of market factors, including:
1. The position of the index, whether it is at a high or low level.
2. The reason why the stock market tends to rise or fall before the appearance of signs of change is that when the upward trend reaches the end of its strength, it will reach a long short balance in the market. The equilibrium in an uptrend depends on whether the market can gather new long energy to determine the possibility of an upward breakthrough, while the equilibrium in a downtrend is more likely to form an upward reversal.
3. Observing the flow direction of market funds and the strength and nature of the incoming funds, it is usually highly likely that the abnormal movements of benchmark stocks in the market indicate the possibility of an upward reversal.
4. Observe whether there are significant fluctuations in buying and selling orders in mainstream hot sectors during the trading session, and pay attention to whether the leading stocks in the sector can rise. If only unpopular stocks make up for the gains or oversold stocks rebound strongly, it is often not enough to trigger an upward trend.
Of course, when we are trading stocks, people tend to wonder how to distinguish between a washout or a peak?
Laotie believes that after continuous rise, the market will adjust, but the bull market is always slow to rise and fast to fall, and many investors are accustomed to it. Those who dare to buy stocks in the crash have made a lot of profits recently. So a big drop is not a risk but an opportunity. On the contrary, if the market shows a small and slow decline trend, we should be vigilant.
How can investors distinguish between a correction during the upward trend or a peak in the market?
Due to the purpose of market washout being to intimidate floating chips in the market, its trend characteristics often meet the following criteria: the downtrend that occurs is often fierce, rapid or continuous, and methods such as breaking through important support lines are used to achieve the purpose of washout. The true downward trend is often mild, numbing investors' vigilance with a slow rate of decline. Due to the fact that the previous sharp declines were mainly driven by the need to adjust the shareholding structure and attract funds, they belong to the nature of market washing.
Based on the analysis of the average holding cost in our current market, most chips are in a profitable state, and if the main funds use a sharp decline to sell, it is equivalent to cutting off their own way out. In addition, from the perspective of the duration of the plunge, it also has the nature of a washout. The washout duration during the uptrend is generally not long, and if it is too long, it will be detected by retail investors and they will take advantage of it to buy in large quantities.
From the analysis of market trends, the first few drops were the result of the main players collectively washing up and panic selling by investors following the trend. What does this high level of washing up indicate? It's simple, it means that the market won't immediately top here, and fluctuations are inevitable. Only a tortuous upward trend can bring more opportunities to investors.
In summary, we believe that once the occurrence of a turning signal is confirmed, attention should be paid to changes in the trend. If there is an upward turning signal, it can be intervened by adding positions; If it is a downward plunge, it is necessary to quickly choose to sell and stop loss before leaving.
