Is it a pullback or a reversal!?

Recently, the market trend has been truly alarming. Are you also considering whether this is a pullback or a reversal?

A pullback is like a small breather for the market, where prices make some short-term adjustments without changing the main trend.

It's like when you're running; you get tired, stop to drink some water, rest a bit, and then continue running. That's a pullback.

A reversal, on the other hand, is completely different. It's when you feel like you can't go on halfway through your run and you head home to rest. That's a fundamental change.

How can I identify a pullback?

We need to confirm whether the current market trend is upward or downward. At this point, we can use trend lines or moving averages to make a judgment.

If the price drops by no more than 5%-10% after hitting a high and then rebounds after finding a support level, that is usually a pullback.

Previous price highs or lows, trend lines, and moving averages are all potential support levels.

Many experienced traders also use Fibonacci retracement lines to assess support and resistance. Pay attention to the numbers 38.2%, 50%, and 61.8% when using Fibonacci retracement lines.

Common pullback trading strategies include using trend lines to depict market movements, moving averages (especially the 50-day moving average) to gauge market sentiment, and Fibonacci retracement lines to find key retracement levels.

When the price is above the 50-day moving average, it typically indicates that the market is in a bullish trend.

Practical examples can better illustrate these concepts.

Confirm support levels using trend lines or judge the market as bullish when prices consistently run above the 50-day moving average.

When prices fluctuate significantly, Fibonacci retracement lines can help us more accurately predict pullback support points and the likelihood of a reversal.

Carefully assess and adjust strategies at any time! Wait for the dawn to arrive~