The key to judging the start and end of the market is the formation and breakthrough of the bottom and the top.
In a falling market, the bottom is a gradual exploration process. Every time a new low is reached, it is often accompanied by a sharp decline. If the bottom position gradually rises during the subsequent attempts to build a bottom, forming a "bottom-up" trend, this indicates that the downward momentum is weakening. When approaching these gradually rising bottom areas again, it may be time to consider establishing a long position. Refer to the past bottom prices, such as the lows of July 5 and July 8. When these lows are effectively broken and confirmed to be no longer touched, the market may have reversed upward.
Similarly, in an upward market, the top is not achieved overnight. After hitting a new high, there may be consolidation, but when attacking again, if it fails to surpass the previous high, even if it only falls back slightly, it is also a signal that the top may be formed. If two or more consecutive attacks fail to surpass the previous high, the reversal signal is strengthened. At this time, you should be alert to the end of the long market and consider arranging a short position.
If the current bull market is still strong and there is no obvious sign of a top, that is, the continuous upward attack fails to effectively surpass the recent high, it is not advisable to rush to short. We should pay close attention to the comparison between the future peak price and the current high. If it shows that the upward momentum is weakening, it is the right time to consider shorting.
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