How to profit when the top and bottom are formed

First, the concept of multi-head top and bottom is described

(1) Long bottom: The current bottom is greater than the previous bottom.

(2) Overhead: The current top is larger than the previous top.

(3) Strong long bottom: The current bottom is greater than the previous bottom and greater than the previous top.

(4) Weak long bottom: The current top is larger than the previous bottom, but smaller than the previous top.

Second, the concept description of short top and bottom

(1) Short bottom: The current bottom is smaller than the previous bottom.

(2) Empty head: The current top is smaller than the previous top.

(3) Strong Empty Head: The current top is smaller than the previous top and smaller than the previous bottom.

(4) Weakness: The current top is smaller than the previous top, but larger than the previous bottom.

III. Description of the concept of horizontal top and bottom

(1) Horizontal top: The current top is equal to or similar to the previous top.

(2) Horizontal bottom: The current bottom is equal to or similar to the previous bottom.

It must be pointed out that the top-bottom pattern and related descriptions are the most common and basic concepts, but they are important for the application of the top-bottom rule and even the analysis of the trend structure. In addition, it should be noted that the top-bottom is an important part of the technical system of market structure theory and has strong independence. However, when conducting trend structure analysis, this rule must not be used in isolation to complete all structural analysis. It must be organically combined with other technical rules for comprehensive analysis.

How do we profit when the top and bottom are formed? The basic rule is that the long side looks at the bottom, and the top is supplemented; the short side looks at the top, and the bottom is supplemented.

(1) In the multi-headed trend structure, the long-headed bottom should be used as the first signal and basis for whether the long-headed trend is established. When the long-headed bottom is established, it means the development of the long-headed trend.

(2) In the multi-headed trend structure, the multi-headed trend should be used as an important signal and basis for the continuation of the multi-headed trend. When the multi-headed trend is established, it can be initially determined that the multi-headed trend will continue. On the contrary, when the multi-headed trend cannot be established, it means the occurrence of a multi-headed trend.

(3) In the bearish trend structure, the bearish head should be used as the first signal and basis for whether the bearish trend is established. When the bearish head is established, it means the development of the bearish trend.

(4) In the bearish trend structure, the bearish bottom should be used as an important signal and basis for the continuation of the bearish trend. When the bearish bottom is established, it can be initially determined that the bearish trend will continue. On the contrary, when the bearish bottom cannot be established, it means the occurrence of a bearish turn.

(5) The characteristics of the establishment of the top-bottom pattern are: the formation of an obvious reverse band inflection point or turning point.

(6) It is necessary to comprehensively study and judge the long-space trend structure in combination with technical rules such as balance rules and band rules.