As one of the public investment and financial management methods, stock investment has been recognized by the majority of investors, and investing in the stock market has become a fashion. Investors all want to make big money in the stock market, but as an investment, if you make money, you must lose money, and the proportion of money lost is often relatively large. Some investors may think that making money in the stock market is nothing more than buying low and selling high, and then repeating the operation can continue to make profits. This seems to make sense and is correct. However, the actual situation is not like this. Many times, we often buy at a low point but not at a low point; we do not sell when we should sell, and we do not buy when we should buy.
The reason for investment mistakes is that investors do not know how to grasp buying and selling points. In other words, investors do not have a clear concept of when to buy and when to sell, let alone a reasonable stop-loss and stop-profit plan, which is very dangerous in the stock market. In addition to paying attention to the constantly changing numbers on the books, it is more important to pay attention to the risks and opportunities that come at any time, that is, to pay attention to the prompt signals of buying and selling points. Only in this way can we be able to be comfortable and relaxed in the stock market. Achieve stable profits.
1. Two forms of moving average divergence
After the moving average bonding pattern ends, there is a problem of direction selection. This directional choice will bring about another form of moving average - moving average divergence. When
mentioned the moving average divergence, it is easy to think of the moving average thickness space. The occurrence of moving average divergence means that there must be multiple layers of thickness space between multiple moving averages. This is a multi-layered protection for the price, and it is also a manifestation of the price being in a strong start-up stage.
moving average divergence has two forms, namely upward divergence and downward divergence.
(1) Divergent upwards, long arrangement
moving averages diverge upwards, which means that after the moving average bonding pattern ends, it chooses to break through upward, and the moving averages of multiple different periods open up the thickness space between each other. Multiple moving averages of different periods are arranged in sequence with the short-term at the top and the long-term at the bottom, which is a long arrangement. The
moving average system has diverged from upward to a long arrangement, which means that the stock price has launched an upward attack with the help of multiple layers of protection and strong support from many parties.
The upward divergence of the moving average and the long arrangement are extremely strong in supporting the price, especially when they have just come out of the bonding form, they often have extremely strong explosive power. When
positions stocks appear in this form, traders should adopt a resolute strategy of holding positions and waiting to rise, and not be disturbed by strong fluctuations in stock prices during the day. Until the moving averages diverge or the bull arrangement changes, the next strategy to be decided will be decided based on changes in the market and technical environment.
As shown at point A in Figure 1-1, the three moving averages of the moving average system diverge upward and are arranged in a long position. As long as the thickness space between the moving averages is not completely closed and the divergence pattern continues, it means that the bullish offensive will not stop. Even if the stock price falls back and adjusts on a certain day, it is mostly just a short day-to-day fluctuation.
What traders should pay attention to and strengthen their analysis is point B. The moving average divergence pattern at this location has disappeared, which means that the first wave of rising prices from point A has temporarily come to an end. There are many technical means that can be used to judge the nature of the stock price drop at point B. Even if you only rely on the short-term moving average system in the chart, you can draw the correct conclusion. At
B point, although the moving average divergence pattern has disappeared, the 30-day moving average below still maintains an upward trend, which leaves an important technical foundation for the moving average system to diverge upward again and the bull arrangement. When the stock price fell back at point B and finally gained strong support from the 30-day moving average, it rose again, and the moving average system once again diverged upward, forming a long position, and another buying point appeared.
(2) downward divergence, short position arrangement
moving average divergence downward, which means that after the moving average bonding pattern ends, it chooses to break through downward, and the moving averages of multiple different periods open up the thickness space between each other downward. Multiple moving averages of different periods are arranged in sequence with the short-term at the bottom and the long-term at the top, which is a short arrangement.The
moving average system diverged from downward to short position, which means that the stock price has launched a downward attack under the multi-layer suppression of the moving average and the strong support of the short side.
In Figure 1-2, after the stock's moving average bonding pattern ends, the moving average begins to diverge downward at point A and forms a short position. The downward divergence of the moving average and the arrangement of short positions have a very heavy suppressive effect on the price, especially when the bonding pattern has just ended and the short side is gaining momentum. It is the best choice to short or or wait for a short position.
Under the pressure of the downward divergence of the moving average and the arrangement of short positions, it is difficult for the stock price to rebound sustainably. As shown at point B in Figure 1-2, the stock price has been weakly consolidating sideways for many days. After a strong one-day rebound, the stock price quickly weakened. Technically, this counterattack reflects the weakness of many parties. It is difficult for individual stocks to successfully organize even a decent strong rebound, and at least in a short period of time they will not become worthy of attention and tracking.
When the moving average diverges downward and short positions are arranged, it is important not to blindly rush for a rebound based on the day-to-day price fluctuations, otherwise it is tantamount to snatching food from the tiger's mouth.
The time-sharing trend in Figure 1-3 is the trend on the day of the strong single-day rebound at point B in Figure 1-2. After opening high that day, it surged higher, and then fell back almost throughout the day. Even if you don't chase the high, but buy when the stock price falls back wave by wave, if the stock price opens low the next day, the buyer will be killed directly, with almost no possibility of profit.
2. Long and short-term techniques and tactics of moving average divergence
In the form of moving average divergence, moving averages or moving average systems in different time periods have different depths of revealing the market. The divergence pattern of the
short-term moving average system shows that prices have the power to rise or fall, at least in the short term. The divergence pattern of the medium and long-term moving average system indicates that the price is in a wave of secondary market or trend market.
should be an ideal choice to deal with different levels of moving average divergence patterns from the perspective of trends and tendencies. At the same time, medium and long-term moving averages can also be used to verify the reliability and sustainability of the divergence pattern of the short-term moving average system.
(1) Verification of the divergence pattern of the short-term moving average system
At point A in Figure 1-4, the short-term moving average system formed an upward divergence pattern, and then began a short-term rise and crossed the 250 daily moving average above.
This 250-day moving average can be regarded as a measure of the upward status of the short-term moving average system. If the short-term moving average system can successfully break through and truly stand on this moving average, then the nature of this rising market needs to be redefined from a trend perspective. Otherwise, it is still just a short-term rebound. At
B point, the short-term moving average system and the stock price are consolidating up and down the 250-day moving average. Technically, this is a sideways pattern with an unknown direction. At the same time, given that the trading volume at this stage shows a trend of dissipating, we cannot have too much hope for the future market trend. . If you make inferences based on subjective wishes, you are likely to face losses. After
B point, the short-term moving average system and the stock price fell downward, but soon the short-term moving average began to gather, and the stock price ran slowly under the support of the moving average system most of the time. Combined with the analysis of the technical environment, after four years of decline, the stock should currently be in the historical low area of price, and the stock is likely to be in the stage of building a bottom. At
C point, the short-term moving average system once again formed an upward divergence pattern and a long arrangement, and easily broke through the 250-day moving average. In the case of a sharp increase in trading volume, the stock price rises rapidly, and the upward divergence angle of the short-term moving average system is also extremely steep. This technical form of steeply diverging angles shows that there is a large amount of funds absorbing chips. Point C has experienced a huge increase in volume. It is very likely that the main force did not absorb enough chips during the decline and had to resort to the method of pulling up to absorb .
Some people may not understand the main force's sudden increase in funds, so let's briefly talk about this issue.
For those who bought the stock during its four-year decline, some of them will choose to sell immediately after the trap is released, and most of them will choose to sell during the adjustment process after the strong pull-in of the stock price. This is what the main force wants.
Figure 1-5 is the overall trend of the stock in Figure 1-4.Point C is the last point where the short-term moving average system diverged upward. Point A in the figure is the point where the strong pull ends, and it is also the point where the stock's stock price exceeds its historical high and reaches a new high. The reason why
A point releases huge trading volume is because the main force needs to complete the final accumulation of funds through strong pull and shock. It can be seen from the figure that after point A until the market peak, the trading volume has been decreasing.
(2) Divergent forms of medium and long-term moving averages
The divergent forms and long or short arrangements formed by the bonding of medium and long-term moving averages often have extremely high credibility. This form is not common and will only appear in stocks that have fallen sharply for a long period of time.
It takes a long time for the medium and long-term moving averages to go from converging, adhering to diverging. This process will never be smooth, and there will inevitably be large price fluctuations many times, which may even make position holders lose confidence and dare not believe that the medium and long-term moving average will one day diverge upward.
As shown in Figure 1-6, point A is where the stock's medium and long-term moving averages form an upward divergence and a long arrangement. Before this pattern appeared, the stock had gone through a long process of stock price fluctuations, moving averages converging, and moving averages sticking together. Even in the process of forming an upward divergence pattern, the stock price still experienced multiple rapid pullbacks.
Without wind and rain, it is difficult to see a rainbow. This sentence is also very suitable here.
