Revealing the secrets of identifying true and false bottoms
During the long bear market, a sudden positive line often makes people mistakenly think that dawn is coming, but in fact it is mostly a trap. Those who are eager to buy the bottom are prone to "cut in half", and those who cover their positions will suffer more. So, how to identify the true bottom with wisdom and avoid the temptation of false bottoms?
1. Multiple trials show the true gold
The true bottom is not a one-day job, it needs to go through many trials. V-shaped reversals are mostly baits and lack a solid foundation. Double bottoms and triple bottoms show the true chapter. After the initial rebound, they may be suppressed again, or even set a new low. After repeated repetitions, the bottom is solid. The sudden V-reversal is mostly a trick by the main force to lure more.
2. Capital running water is quietly injected
Beside the true bottom, capital is surging undercurrents. Trading volume has awakened from extreme shrinkage, and the moderate increase in volume is accompanied by a slight increase in prices. Capital is quietly deployed, which is not achieved overnight. Continuous capital inflow is a precursor to reversal.
3. No feeling for good news, extreme pessimism turns around
On the eve of the real bottom, market sentiment fell to the freezing point. Good news fell like a stone in the sea, the market was unmoved, and even continued to fall. Bulls turned bearish, and the market was filled with despair. However, things will turn around when they reach their extremes. This extreme pessimism is the darkness before dawn, and the bottom is just around the corner.
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