The focus of this study article is to help investors understand when the stock price stabilizes and strengthens in a downward trend, and when a stock price increase without sufficient volume support is not a true reversal requirement.
Some investors often continue to hold stocks even when they are in a weak downward trend, unaware of the basic pattern of a strong stock price turning into a weak one. Due to the fact that when a stock is in the top range of the upward trend, funds often exhibit very active behavior in order to make profits at high levels, creating a strong illusion to attract market investors' attention, which is essentially a cover for selling. So, when the initial downward trend of a stock is formed, the high trading volume accompanied by signs of increased trading volume should alert investors, or it may be a sign of the main force fleeing. Once the stock price falls below the support of the medium-term moving average, investors must choose to exit in the short term.
When investors proficiently grasp the signal of the stock price peaking at a high level, the subsequent downward trend of the stock price is nothing more than maintaining a shrinking downward pattern. After the high-level funds flee, the remaining chips that are unwilling to be eliminated will obviously not be sold, and they would rather be trapped in it and endure the torment. Due to the lack of active buying, selling is rare; The stock price naturally forms a "free fall" pattern to maintain a shrinking downward trend.
Afterwards, investors should make judgments on the limit of the decline during the downward trend of individual stocks: (1) If the stock price is in a strong oscillation range, the bottom of the box is naturally a good buying point. (2) If the stock price shows a trend of downward trend and encounters a stock decline followed by a weak decline in the overall market, the weak trend will be much more obvious and the decline will be significant. It can be treated as a bargain hunt by maintaining 30% or 50%. If there is an extreme decline, it is possible for the stock price to drop by 100% or even 150%. For example, if the band of coal stocks drops by 50%, bottom fishing funds will inevitably enter the market, which is related to the nature of the sector. Resource stocks have strong volatility and also have active rebound strength when oversold.
After the mid-term peak of the stock price, there will be a process of bottoming out and the platform will rebound. Pay attention to whether the trading volume has increased. How to deal with the initial stage of sustained decline in stock prices, where short-term rebound does not constitute a reversal and strengthening momentum, and the amplification of natural volume is not obvious enough. After a few days of rebound, the stock price can at most touch the 30 day moving average, and then fall back below the rebound starting low point again. Due to the weakness of the overall market, the downward trend continues to form again. After another decline, a pattern of increased trading volume gradually emerged, and at this time, larger levels of stock prices could continue to appear. The stock price slowly formed an effective rebound based on the short-term moving average, and after encountering obstacles and falling back, it no longer hit a new low. Restarting the volume can support the stock price to strengthen, which can be seen as the establishment of the bottom of the stage.
Obviously, to determine the end of the mid-term downward trend in stock prices and to stabilize and strengthen again, technical analysis must comply with the four elements of "price, quantity, time and space", which are indispensable. When the bottom volume of the stock price far exceeds the platform volume built during the decline, it is time to buy. Investors can use a combination of factors such as the strengthening trend of the stock price moving average and the magnitude of the stock price decline, and practical experience has shown that the effect is very good.
After the stock price strengthens again, effectively breaking through the platform formed in the downward trend can quickly buy for short-term gains. The collection of chips by market makers is always carried out in a downward trend, so only when the stock price falls into the low price range that satisfies the market makers, will the market makers definitely raise a large number of chips, and the trading volume will significantly increase. Investors don't need to rush into the market. It's not too late to intervene after a breakthrough is established
After the mid-term peak of the stock price, there will be a process of bottoming out and the platform will rebound. Pay attention to whether the trading volume has increased. How to deal with the initial stage of sustained decline in stock prices, where short-term rebound does not constitute a reversal and strengthening momentum, and the amplification of natural volume is not obvious enough. After a few days of rebound, the stock price can at most touch the 30 day moving average, and then fall back below the rebound starting low point again. Due to the weakness of the overall market, the downward trend continues to form again. After another decline, a pattern of increased trading volume gradually emerged, and at this time, larger levels of stock prices could continue to appear. The stock price slowly formed an effective rebound based on the short-term moving average, and after encountering obstacles and falling back, it no longer hit a new low. Restarting the volume can support the stock price to strengthen, which can be seen as the establishment of the bottom of the stage.
Obviously, to determine the end of the mid-term downward trend in stock prices and to stabilize and strengthen again, technical analysis must comply with the four elements of "price, quantity, time and space", which are indispensable. When the bottom volume of the stock price far exceeds the platform volume built during the decline, it is time to buy. Investors can use a combination of factors such as the strengthening trend of the stock price moving average and the magnitude of the stock price decline, and practical experience has shown that the effect is very good.
After the stock price strengthens again, effectively breaking through the platform formed in the downward trend can quickly buy for short-term gains. The collection of chips by market makers is always carried out in a downward trend, so only when the stock price falls into the low price range that satisfies the market makers, will the market makers definitely raise a large number of chips, and the trading volume will significantly increase. Investors don't need to rush into the market. It's not too late to intervene after a breakthrough is established
