How to identify backdraws, rebounds, and reversals?

How to identify anti-withdrawal, rebound, and reversal in actual combat? During the decline of the foreign exchange market, a series of rising prices will be formed. According to the strength and final evolution of these rising prices, they can be divided into three categories: anti-withdrawal, rebound, and reversal. The following is a brief introduction to their different characteristics:Backdraw:

That is, after the stock index has fallen for a period of time, it gives people the feeling that it cannot fall, and even the technical indicators are in an oversold state. The disk shows that the trading volume has reached the ground, and a rise occurs at this time. But the reverse draw at this time is not an end, but a means. It makes people mistakenly think that it has rebounded. If you follow the trend and buy in such a reverse draw, you will definitely be fooled. Its main characteristics are:

1. The transaction volume is small during the reverse draw, and the volume cannot be effectively amplified.

2. Lack of leading hot spots or new influential leaders when withdrawing.

3. Lack of signs of active entry of incremental funds during the anti-withdrawal.

4. The height of the reverse pump will not touch the top and the broken position, and it will not have much digestion effect on the adjustment pressure of the upper gear.

The most important investment principle of anti-draw is "sell!" Because anti-draw is a confirmation of the phased top and the trend of breaking the position. After breaking the position, the anti-draw power is limited and often does not have the value of short-term participation. Therefore, investors should at least be bearish on the market outlook in the mid-term, resolutely not chasing high, and immediately settle if there is a profit. If there is no profit, they should also adopt the investment principle of picking up highs and reducing positions.

It is worth noting for investors that even if investors are bearish on the market outlook in the middle line, they should not blindly close their positions after a short-term sharp decline. Instead, they should use a sound investment strategy to take advantage of the market backlash and sell at an opportunity. This kind of selling opportunity is usually selected when the rising market shows weakness or hits the upper resistance line.

Rebound:

That is, on the way down, some kind of good news breaks out, and the main market force takes advantage of the opportunity to take advantage of the news to lift the exchange rate index or exchange rate. However, the general rebound can only be three consecutive suns, and there are few cases of five or seven consecutive suns. After three consecutive suns, it is necessary for the market or exchange rate to reverse and organize.

If the pullback is sorted out for 2-3 days, and the broader market or a pair of currencies continues to rise, it means that the main institution will have to make a decent rebound. But no matter how fast or strong its rebound rate is, it is necessary to closely observe whether its rebound has exceeded the historical peak. If it starts to turn around near the top, the peak is not strong enough, indicating that the upward pressure is high, indicating that the rebound is coming to an end. Especially for a quick rebound, investors need to restrain the idea of participating and stay away from it.

As the saying goes: "The rebound is not the bottom, but the bottom does not rebound". The rebound market is not a fundamental reversal of the market trend. After the rebound, the foreign exchange market will still fall. Investors are rushing to rebound in order to reduce the cost of holding currency and gain short-term profits. However, the rapid rebound does not leave investors with profit margin in terms of rebound space and rebound time. Therefore, it is not suitable to participate in the short-lived rapid rebound market.

Reverse:

For example, when the index fell to 325 points in 1995, the management issued three major bailout policies, which caused the entire market to flush red, reversed upward, and rose by more than 200 points on the first day. There have been several such outbreaks.

It should be noted that when the market is in a frenzy, the market will gradually come to an end. The most important investment principle for a reversal is "buy!" When a reversal occurs, many investors like to chase currency pairs that have not risen much, and are unwilling to chase up the exchange rate that has risen. This is an investment misunderstanding of many investors.

In fact, the more it starts first in the reversal market, the more it rises sharply, the more the hot plates and leading currencies in the future market, the more valuable it is to participate in. Because the reversal market is a strong upward market, its investment philosophy method is very different from that of the weak market and the equilibrium market. Just as the size of the exchange rate decline in a weak market does not determine whether the currency pair will stop falling.

How much the exchange rate rises in a reversal market does not determine the future upward momentum of the currency. In a reversal market, the key to whether a currency pair decides to chase up is to see whether the currency has continued to rise in the future market. Previous reversals have proved that investors who dare to boldly chase up strong prices in the early stages of the market have made huge profits.