Bearish trend reappears: When market sentiment is high, waterfall declines can often occur at any moment

Recently, the market has shown continuous bearish declines, and the performance has been sluggish. This trend hides potential risks that deserve attention. After two to three days of continuous bearish declines, they are often accompanied by a significant waterfall decline, especially in the context of the current overly optimistic bull market sentiment.

1. Current market characteristics

• Accumulated risk from bearish declines: Continuous small declines are usually a signal of funds quietly withdrawing, failing to attract more buying interest.

• High sentiment conceals hidden dangers: When market sentiment is overly uniform, and retail investors are generally bullish, the main players often take the opposite action, choosing to rapidly sell off to complete the washout.

2. Triggers of waterfall declines

• Rapid withdrawal of funds: After bearish declines, the pressure on funds increases, and a small amount of selling can trigger a chain reaction, leading to a significant crash.

• Long positions being liquidated: Excessively high leveraged long positions may become targets for main players to sell off, triggering large-scale stop-losses that further exacerbate the downward trend.

• Breaking key support levels: Important support being breached intensifies market panic, and selling pressure continues to amplify.

3. Operational advice

• Control risk: Reduce high-leverage positions to avoid being forced to liquidate due to sudden declines.

• Monitor key levels: Closely monitor changes in market volume and key support levels, and adjust positions in a timely manner.

• Wait for opportunities: Do not blindly catch falling knives; wait for the market to stabilize before choosing to enter at lower levels.

Summary:

The current market's high sentiment hides the trap of bearish declines, and waterfall declines may come at any time. Investors should remain calm, strictly implement risk control strategies, and avoid passive losses in volatility.