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Technical chart analysis as a way of investment analysis, it is based on is based on three assumptions, namely:
â’?reflect the market price of everything;
â’?price will follow the direction of propulsion;
â’?a repeat of history is back.
Under the first assumption, technical analysis does not need to focus on why the change in price, only concerned about how the change in price. The second assumption is that to use Newton's first law of mechanics, "without any outside influence, the object will follow a certain direction constant speed ahead", price is like a physical object, just as would be along a certain direction, until the subject to external factors . History will repeat itself reflects the psychological reaction of market participants.
Technical chart analysis, the basic principles can be summarized as the following:
â’?price is determined by supply and demand;
â’?commodity supply and demand is again a variety of reasonable and non-rational factors to decide;
â’?ignore minor fluctuations in the price, then price changes will be a period of time showed a certain trend;
â’?change in the price trend will change in the relationship with the market supply and demand change. The basic method of technical analysis is to track past investment behavior based on to inspect the future or potential investment opportunities.
Technical chart analysis tools commonly used are:
1.K Chart
2. Volume
3. The trend line
4. Moving Average
5. Graphical Analysis
6. Gap theory
7. Wave Theory
What is the K-line diagram
K Line also known as yin and yang lines, bar lines, red and black lines or candle line, originated in Japan in Tokugawa m municipal trading, after 200 years of evolution has been widely used in technical analysis of stock market, becoming technical analysis of the most basic one of the ways to form now with a complete analysis of the theory of form and a technical analysis method. K-line unit according to the different, generally divided into: Japan and K-line, Zhou K Line, K Line and minutes on K-line. Its formation depends on each unit of the four data, namely: opening price, highest price, lowest price, closing price. When the opening price below the closing price, K-Line for Yang Xian (usually with red); when the opening price is higher than the closing price, K-line Yinxian; when the opening price is equal to the closing price, K-line is called doji. When the K line is Yang Xian, the highest price and the closing price of the thin line between the part is called the shadow line, the thin line between the lowest and the opening price as the next part of the shadow line, the open and close between the columnar known as the entity.
As the K-line painting, including the four basic data, so we can learn from K-line pattern can be judged within a multi-trading hours, and air conditions. When the opening price is equal to the lowest, the highest price when the closing price is equal to, K-line known as the bald barefoot big Yang Xian, indicating the strong gains; when the opening price equal to the maximum price, the lowest closing price is equal to, K-line known as the Big Yin Xian that share prices collapse; when the opening price is equal to the closing price, when, and on the shadow line and under the shadow lines were equal, K-line known as the Grand Cross of the Star, said the long-short intense fighting, evenly matched, and afternoon are subject to change, when the cross star appears in the K-line diagram is relatively high, the doji is called twilight stars; When the doji appears in the K-line diagram is relatively low, the doji is called Morning Star. Integrated K-line type, and its representative in size of the difference between long-short the power to cross-sing, equilibrium point, Yang Xian for the multi-party dominant, large multi-strongest for Yang Xian, Yin Xian empty square dominated by large Yinxian for Kongfangliliang the strongest. It should be noted that investors looking at K line, a single K-line is very meaningful, but should be with the previous K-line for comparison meaningful.
K-line and long-term basic pattern
A single K-line could reflect the strength of a single-day stock price changes, but it does not accurately reflect the share price over time trends. Well, for a period of stock price changes, we are no longer using K-line yin, yang, the upper and lower shadow lines to judge, but after using K-wire connection coupled with the formation of long-term patterns in order to determine. K-line and long-term basic types are: head and shoulders (head and shoulders, head and shoulders at the end); double-top (M head); double bottom (W end), etc..
Head and shoulders type: K-line after a period of time after the gathering, at a price within the region, there will be three vertices or end points, but the second peak or the bottom is lower than the other two vertices or end points, higher or lower pattern, this pattern is called head and shoulders. In which a second shoulder for the head and shoulders; a second shoulder at the end of the end for the head and shoulder type. Sometimes, however, may occur more than three vertices, or at the end point, if they develop one or two head (or bottom), two left shoulder and right shoulder, called the compound head and shoulders top (or the compound head and shoulders at the end) .
Triangle shape: In the field of technical analysis, morphology is often used in school geometry, "triangle" concept. From the K-line diagram, the typical triangular shape general will appear triangle, up triangle, down triangle of three. School of technical analysis patterns are often used to judge the form of a triangle, and predictive. The formation of the triangle are generally from the stock to a certain stage of development, there will be repeated or the stagnation of stock prices, stock prices will become increasingly smaller amplitudes, K-line high-point and high point connected with the low low connected to and extends to the point of intersection at this time will find that stock price run in a triangle, this kind of shape triangle as a typical representative of Youyi. The emergence of this form, investors should not rush to hands-on, you must wait for the market to complete its cycle of a fixed shape, and a formal breakthrough towards a certain direction in order to correctly judge their future trends.
Equilateral triangle is also known as "sensitive triangle", is not easy to judge the future trend, from the K-line graph to confirm the main triangle should pay attention to the following conditions:
â’?price movements of the triangle area from left to right into small, from wide and narrow, and a high of more than a high low, a low of less than a low.
â’?volume within the equilateral triangle shape, with the volatility of stock price and gradually decreasing from left to right.
â’?form when the triangle to the end of the development, its price volatility and turnover appears to abnormal contraction and calm, but this calm will soon be broken, price and volume have to be changed.
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In the equilateral triangle, the price break down the hypotenuse, the volume does not immediately increase, approximately below the hypotenuse in the following three to four days will gradually increase and stock prices suddenly put down the massive breakthrough, the dealer may be manufactured in short trap, stock movements are not the late fall, but rising.
Equilateral triangle in a normal trend, the volume should be decreased gradually from left to right, if the trading volume during this period, suddenly big suddenly small, then break up when the stock price can not be trusted the most generally false break.
After the break up of triangles in hypotenuse, and with a huge amount, the share price will always be a short-term in nature, "withdraw sword", which withdraw sword in the end, roughly in the triangle on the tip of the tail, here is the long-short focal point both forces. Multi-party dominant, afternoon will have a fairly good gains.
After a crash after equilateral triangle shape, generally only the short side, a break, and soon will begin a new round of decline, this triangle can also be called "escape the triangle", investors should pay close attention to this.
Comprehensive as the above, investors in the treatment of triangle shape, the less moving your eyes open, pending a formal and effective breakthrough price, and then waiting in the wings.
Ascending triangle pattern: all the triangles form the most significant one thing in common is this: stock price volatility gradually decreases from left to right, long-short mutual defense and gradually approached, and the volume is gradually going down, until the two sides exchange fire on turnover of amplification.
Ascending triangle its name suggests, the trend of increased state of affairs, from the morphological point of view, multi-party dominance, the short side is weak, the powerful multi-buying price at the bottom of the gradual elevation, while the short side of energy shortage, but at a level of neckline bit to do to resist. From the K-line diagram drawing low with the lows can be connected, there tilted from left to right above the support line, and the high points and high points, connected to the basic was the horizontal position. Simply from the graphical view, people feel a breakthrough price at any time up to form a rally. However, technical analysis can not be unitary with the general form of camp will be a focus on price patterns, but he would not ignore the pattern within the volume changes. Triangle shape on the rise within the volume is decreasing from left to right was the state, but when it break up the moment when the level of the neckline, there must be co-ordination of large volume, or volume is too small, then there will be a price The pattern of consolidation, from the graphics out of the failure patterns. If the increase in volume within the triangle shape was irregular distribution, then the chances of maintaining larger consolidation.
Because the event of a rise in stock form a triangle trend, the afternoon is usually optimistic, but this form to the general investors a better understanding, the dealer will use this form to create "traps" to lure small investors to buy shares that he took the opportunity to place out in the horizontal neckline goods. In general, ascending triangle pattern, the "false break" phenomenon is not too much.
As the triangle belongs to a strong finishing up the share price at the bottom of the gradual elevation, long buying enthusiastically, while the dealer would also like to push a boat, at one stroke crush an empty square. If the dealer to ship the neckline bit, then fell back price range will not be too large to fall up to shape in low position, while the triangular shape will increase damage, the evolution of a rectangular finishing.
Therefore, the ascending triangle break through successful breakthrough bit is the best selling points, afternoon then a wave of impressive gains. If the ascending triangle break it fails, at most, will undertake a strong order patterns emerged within the rectangular order to form the head shape of the probability are not incompatible.
Descending triangle pattern: down triangle equilateral triangle with the increase in the deformation of the triangle are the same, but long-short of both energy and defense locations are different. Descending triangle belonging to vulnerable consolidation, the seller seems more active, throwing a strong will to keep the price down, from the graph, causing pressure on the neckline to the lower right corner from the left tilt, the buyer will pay just hanging at a certain price, resulted in the level of support line resistance, resulting in the formation of K-line descending triangle chart pattern.
In the descending triangle pattern with the increase in trading volume within the triangle from left to right, like showing a reduced state, but the difference is that the stock level at the break down the support line, it does not need a big volume to comply with the breakthrough, as long as is buying less, and air will easily break with a small volume multi-line of defense.
Triangle shape on the decline, many investors are not below the level of support level, it will think that the level of support for its strong support for the effective, but as the bottom of the form of recognition, in fact this should not rush to confirm the bottom of the form. In particular, most people it identified as the bottom of the zone, should be more careful. This is because we all thought the bottom of the food goods in this region, resulting in the dealer there is no way to collect a large number of low-cost chips, dealer at this time the collection will be part of a bargaining chip in the market, as the downward pressure of the tool, in a certain time of making the sudden blaze cast a single, so that no multi-parry, while the support line break in one fell swoop. At this point, the psychological defense of individual investors have also been broken up, selling a leap out of disappointment and accelerated the decline in stock prices, while the bankers took the opportunity to absorb in the low-low-cost chips.
In other triangle shape, if developed to the triangular end of the stock is still unable to effectively break through the neckline, its strength had been consumed long-short end, form will lose the original meaning. But the descending triangle is an exception. When the stock end of the development to the descending triangle, the stock price will fall.
In the descending triangle pattern is broken, its stock price will be a "withdraw sword" process, withdraw sword also the height of the general vicinity of the horizontal neckline. This is because the share price break down, the original level of support has been turned into the level of pressure, in this position, profit pouring disc tray with the escape, the stock will continue to fall sharply.
Therefore, in descending triangle pattern occurs, investors should not rush to support the line as the bottom of the region, and more can not be hastily eat goods, have to wait again when entering the real, not later than the bottom.
Withdraw sword: As the field of portfolio investment in recent years, the continuing popularity of technical analysis, many investors have recognized the stock price once the breakthrough neckline pressure bullish market outlook. But there are some investors in the "real breakthrough" in time for follow-up, and later flesh out, and this is due to investors under the lack of confidence in the stock, "withdraw sword" in the process of being out of the shock.
The so-called "withdraw sword", is the price to a particular direction and to break through the neckline after the share price will be within a few days back neckline-bit test if the breakthrough success, at this time of the neckline or by pressure into the support, or by supporting into pressure on the stock return of a temporary phenomenon in the industry called "withdraw sword." Withdraw sword is not only a breakthrough occurred in the upward (ie, rise), will also break down (ie, decline) later.
When stock prices break upward pressure on the neckline, it is generally thought that there could be a good Zhangsheng afternoon, so closely followed a large number of individual investors. Because many people Zuojiao, Sedan Chair few people is not conducive to the uplift of the dealer, it launched an offensive in the stock price before the dealer will conduct withdraw sword Zhencang, stock U-turn downward, some lack of confidence in shock out speculators, Then move forward with ease, expand the offensive, and constantly pushing the stock higher. This confirms the "want to enter the retreat," This idiom. Withdraw sword rally phenomenon occurs, not only can clean up some floating chips, you can also withdraw sword as a confirmation of the signal based on a breakthrough. "Real breakthrough" of the market, the breakthrough pressure, the pressure would become the original neckline neckline support, and in 2-5 days, the stock price will be re-back test neckline support, and the test is completed and returned to higher orbit. If the stock price withdraw sword in the process of once again below the neckline, then such a breakthrough is a breakthrough are false.
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Conversely, the trend in the fall, when the support is below the neckline after will be about 2 to 5 days, the share price will rebound withdraw sword to the neckline location, this time, the original support was turned into pressure, withdraw sword that is, the last chance to escape. The trend in the real breakthrough, in order to reduce losses, many investors will sell orders is close to the neckline, forming a great sell-off, so the intensity of the withdraw sword stop here, and then it will speed up the stock price fell. However, false break, the dealer will withdraw sword, the big bang would push the stock back to the place above the neckline, making not only wiped out all to see the empty plate, but also forcing investors to high cover their short positions, resulting in "false a breakthrough. "
In general, withdraw sword is a multi-air before the prelude to the offensive side, and in this test the validity of support or pressure, but also test the success of an important basis for a breakthrough, making manufacture of the trap is also a good time, so investors should analyze the situation, make full use withdraw sword phenomenon, in order to improve their operating skills.
Flag-shaped pattern: In the year of the stock market, the emergence of a strong Hengqiang pattern. Many stocks rose to rise, with record high, many investors see the stock price has been high inadvertent catching, while some investors are early dismount, and then pushing up stock prices and then again and again, it is begun to regret it. In fact, in such an extremely strong trend, in general, there should be flag-shaped order, but this was a good opportunity to purchase, instead of shipping out the afternoon will continue strong.
Morphological analysis of the flag belonging to the product of a consolidation trend of stock prices, generally appears in the extreme Quotes. As the name suggests, its form reflected in the K-line diagram, as if hung on the flagpole on the side of the flag. In the stock market, no matter how strong the market, shares can not be kept up or down, there will be time to rest, rest and then continue to move in the original direction. Having a rest when the stock price will be out of the flag-shaped morphological patterns. Flag-shaped patterns can also be said to be multi-or the short side of the station, generally do not stay long, soon fill up, stock prices will once again start.
In the extreme bull market, stock prices soared to a pressure of bits, or this section is called "flagpole" and then began finishing flag, its graphics will form from the left to lower right sloping parallelogram, in some ways they can be regarded as a short-term downward spiral. Within the volume in the form of a regressive, because the flag is a strong finishing, it can not be excessive volume shrinkage, but to maintain a certain level. But the share price once the flag-shaped finishing, break up the moment, inevitably accompanied by big volume, steep rise and then stock prices, its rate of increase will reach Flagstaff spread, and Zhang Sheng fast, up nearly vertical angle. A strong market, their finishing time will not be too long, generally between 5 and 10 days. If the finishing time is too long, easy to loose popularity, the strength of its shape will gradually disappear, but it can not be treated as flag-shaped.
In the extreme bear market, the flag from left to lower right tilted parallelogram can also be seen as short-term up-channel, but the stock price at any time will be accompanied by large volume breakthrough neckline, a significant downturn. Therefore, flag, investors will not pump the price difference should be out, so stock prices fell again after the formation of "second-degree hold-up."
In general, the flag appears in the upward trend will lead the next wave of rose. Flag appears in the downward trend will lead the next wave of fall. Here the flag has played a role in acceleration. Encountered by investors in the upward trend should be buying the flag. Falling trend should be out in time to avoid hold-up.
Wedge shape: wedge-shaped form and shape similar to the flag, belonged to the short-term adjustments in shape, its causes pre-Jie Wei shares have a period of "forced march", price fluctuations, and will almost perpendicular angle to form a flagpole, multi-or air-side After a sprint, the shares pulled back slightly on the short term is reverse, while the formation of wedge-shaped, or flag-shaped. From the morphological point of view, two kinds of graphics are like a flag hanging in the flagpole, but the flag as a parallelogram, while the wedge-shaped neckline, compared with up and down two, will cross in the near future to form an elongated triangle, shaped like a pennant . The upward trend, the wedge-shaped for the left slope to the lower right triangle, in the decline, the wedge-shaped for the left slope to the upper right triangle.
Volume within the wedge-shaped form, but also decreasing from left to right, but it is not like the flag of the volume to maintain a certain level, but the shrinking rapidly, its shape within the volatility range, but also smaller than the flag-shaped Multi. Similarly, the wedge-shaped finishing time not too long, generally 8 to 15 days, too long, then, form strength will disappear, but also may result in the pattern of price reversal.
In the upward trend appears wedge-shaped, indicating bullish market outlook. Break up in the stock price when the volume of neckline do not have to zoom in, but in the next rally, and gradually increment, until the target. Falling trend, the stock finishing at the wedge, after breaking down when the volume does not need amplification, this is because the flag-shaped wedge-shaped finishing time than finishing a long time, multi-or air-side of sexual passion, emotion caused by reduced operation.
There is another point with the flag-shaped wedge is different is that flag after finishing a breakthrough, stock speed up, can be said to soar, while the wedge-shaped breakthrough, more rational price movements, showing modest gains momentum, not as good as the momentum of a breakthrough after the flag-shaped shocking, but the future direction of stock prices is easy to grasp.
Wedge-shaped appearance with the flag is not the end of the performance of Quotes, these two forms have a price break, multi-or air-side temporarily adjusted in order to continue to have the power to the role of the movement towards a certain direction. At the same time, they also played a role in adjusting the angle. In general, stock prices, whether up or down, the trend of 45-degree angle as the base line, when the stock price is too steep angle, or deviation from 45 degrees, the stock will produce 45-degree amendment to the inertia, based on this, when stock prices was Flagstaff , its angle of deviation from 45 degrees, so stock prices will make use of wedge-shaped, or flag-shaped horizontally amended so as to supply the follow-up attacks on multi-or air-side energy.
Box-shaped pattern: also known as the rectangular box is a standard form of horizontal consolidation. Formation is due to rising stock prices every time, always in the same location have been trimmed back to the short side of the block; shares fall of each wave, we also get approximately the same location the support of the multi-bounce, the connection every time rebound high into a level of pressure on the neckline, the connection each time back to block the formation of a low level of support neckline, between the pressure and supported the formation of a rectangle, that is, box-shaped, the stock for some time in the box in the fluctuations, formed Xiangxingzhengli.
Xiangxingzhengli may occur in the head region, may also occur in the bottom of the region, but they generally appear in the stock price way up or down. If the box-shaped patterns appear in the head or the bottom, and the finishing time is too long, then the form will be turned into a park or garden top of the arc-arc at the end of possibility.
Xiangxingzhengli generally due to the long-short future direction of both sides of the confidence in the balance of power, each held their ground, resulting in price volatility in the box back and forth, no significant trend up or down. In the form, the long-short two sides you come to me, do not give way to form a long tug of war. In the early stages of pattern formation, due to long-short two confident, strong Road, then the form of the initial volume within a larger, but as time goes on, long-short sides consumption increased, fighting weakened, together with investors to judge the market outlook unclear , leading to popular slack, took to the sidelines, so the volume inside the box-shaped pattern over time is reduced, was descending like, but their defense is still distant sea, was a balanced confrontation.
Xiangxingzhengli time is normally longer, but there will always be a breakthrough price. Patterns within the long-short break between the two sides have repeatedly attempted, in the end Which is the real breakthrough will break it? Still need to rely on observation to determine breakthrough volume change to determine. In general, whether upward or downward price breakthrough, volume surge should be seen as a breakthrough signal. Within a few days after a breakthrough price, the share price will withdraw sword to the neckline near the test pressure or neckline support of a breakthrough success. If the box relatively long and narrow, its breakthrough of the withdraw sword, the share price will remain for some time near the neckline.
In Xiangxingzhengli period, the investors who are uncertain on the sidelines. If it is short-term speculative master, then we would post in the cabinets Bo back and forth, in the vicinity of the neckline support buying pressure in the vicinity of the neckline thrown back and forth the use of force and the reaction at high buy low, the implementation of box-shaped operation method.
Park arc at the end of Form: Park arc at the end of formation is a consolidation pattern appears in the stock price more than the bottom of the region, is extremely vulnerable Quotes of the typical characteristics. Its morphological expression in K-line diagram is like a bottom of the pot-shaped.
Park arc at the end of the formation of patterns is due to stock price decline over a long period, the seller of the selling pressure gradually disappeared, being short of energy released is basically finished, and many of the high depth of hold-up disk, because share prices have fallen too much, had to change the operation strategy, to continue the long-term holdings intact. However, the buyer is also difficult to assemble a short time to buy gas, stock prices can not rise, coupled with stock price decimated at this time, the stock is only a rest stop at the bottom of a long-term in order to restore vitality, and business was very weak. Shareholders do not want flesh, long reluctant to intervene, the stock fell into a stalemate, the poor stock of small amplitude, this time, the share price at the end there will be a garden-arc shape, the shape also known as stock prices "dormant period."
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Arc shape at the end of the garden, because of long-short the two sides are not willing to actively participate in the stock was extremely dull, this time seems long, takes about 4-5 months time, or even longer. In the form of a very small volume within a single day, sometimes a few minutes before closing a deal. As the stock price is low, some of the makers are determined to speculation within the Xihuo in this form. A long narrow fluctuations, so that some investors because of funding problems and the emergence of some selling, but the dealer has quietly took the opportunity to absorb the low-cost chips, low-cost, require a lot of speculation because of the dealer chip, so the dealer to take in this Xihuo patience The strategy, laid-back attitude, and never raise the price to actively recruit, also makes its Xihuo a longer period.
