"Technical analysis" is a term that anyone who has bought stocks will definitely have heard of, and there are many investors who specialize in technical analysis in the currency circle. Whether technical analysis is effective is an eternal issue, and even There are many ancient and modern papers at home and abroad that use a comparative academic approach to discuss this issue, in which there are both positive and negative opinions. We are also very curious about this topic, so in the next few issues [Is technical analysis useful? 】In this series of articles, we will briefly introduce some common technical analysis indicators, patterns, and schools. Finally, we will put forward our opinions on this topic. If you are interested, don’t forget to follow Nao Ge’s account~
Introduction to Technical Analysis
Technical analysis is a method of studying the prices of stocks, cryptocurrencies or other financial assets. Through the interpretation and analysis of the historical price and trading volume information of the assets, it attempts to find out the rules and trends of the market and further guess the future price trends. . There is a saying that describes the core concept of technical analysis very well: "History doesn't repeat itself, but it often rhymes." We do not expect to predict the future through technical analysis. The trend looks exactly the same as in the past, but by grasping specific signs through technical analysis, we may be able to avoid the impending price avalanche, or we may be able to seize the starting point of the price eruption.
To put it bluntly, technical analysis is observing the two main protagonists: price and trading volume, and each of them will form different forms. Through the arrangement and combination of the different forms of these two protagonists, the knowledge of technical analysis is full of knowledge. Various indicators, terms, patterns and schools, such as "Dow Theory", "Elliot Wave Theory", "Fibonacci Retracement" and so on. The core concepts of each genre may also conflict with each other, and it takes a lot of time to master various essentials, which is why many people are discouraged. There are many teaching courses or books on technical analysis in the market, and there is no shortage of hearing about people who have thoroughly studied technical analysis and applied it in the capital market to make a fortune, becoming the so-called "line fairy". Whether technical analysis is effective or not often depends on the effect. It varies from person to person. Let’s first briefly introduce some common technical analysis indicators and schools.
Several common technical analysis indicators
K line (some people call it naked K)
K-line is the core component of technical analysis. The first step to learn technical analysis is to understand K-line. The K line, also known as the Yin and Yang line and the candle line, is a graph that reflects the price trend. Based on the price fluctuations recorded in different time periods, it is divided into daily K, weekly K, hourly K, five-minute K, minute K, and second K. Etc., the one that records the price fluctuations within a day is called the daily K-line, and the rest can be deduced in this way. The following uses the most common day K for explanation. The K-line consists of four elements: opening price, closing price, highest price, and lowest price.
Closing price > Opening price, that is, the price rises: Yang line
Closing price < opening price, that is, the price drops: Yin line, also called black K
Closing price = opening price, that is, the prices are equal: cross line, also called neutral line
In mainland China, Japan, Taiwan, and South Korea, the positive line is represented by red, so it is also called red K, and the negative line is represented by green, also called green K, that is, red rises and green falls. As for the color of the neutral line, it is not necessarily the same as the other two lines. In Hong Kong, Europe and the United States, it is just the opposite. The negative line is shown in red and the positive line is shown in green, that is, green rises and red falls. Green rising and red falling are also common in the currency circle.
Each K-line is composed of two parts: "real body" and "shadow line". The real body is thicker than the shadow line, and the shadow line is attached to the upper and lower ends of the real body. The real body records the opening and closing prices of the day, and the shadow line records the highest and lowest prices of the day. The shadow line is divided into two types: "upper shadow line" and "lower shadow line". The upper shadow line of the positive line represents the difference between the highest price and the closing price, and the lower shadow line represents the difference between the lowest price and the opening price; the upper shadow line of the negative line represents the difference between the highest price and the closing price. It represents the difference between the highest price and the opening price, and the lower shadow represents the gap between the lowest price and the closing price.
The length of the K-line depends on the gap between prices. The larger the gap between the opening price and the closing price, the longer the real part will be. The same goes for the shadow line. The larger the price difference, the longer the shadow line. If there is no price difference, there will be no shadow line. Therefore, if there is a certain K bar with only a physical part and no shadow line, if it is a positive line, it means that the opening price of the day is equal to the lowest price, and the closing price is equal to the highest price. This is a signal of strong buying power (because you are still buying after buying all the way to the closing price). , so closing price = highest price). On the contrary, if there is a Yin line physical K bar, it means that the opening price of the day is equal to the highest price and the closing price is equal to the lowest price. This is a signal of strong selling force (because the selling is still selling all the way to the closing price, so the closing price = the lowest price) .
How to read K line
Looking at the K-line can be divided into looking at a single K-line and observing the continuous trend. A single K-line is usually used to judge reversal signals or the strength of buying and selling orders on the day. If you want to look at the entire trend, you will look at the combination of multiple K-lines. "K-line chart", the vertical axis is price and the horizontal axis is time.
14 common single K-line patterns
Dayang line (yang line without upper and lower shadow lines)
Cause: The opening price is the lowest price, and then the price goes up and closes at the highest price, which shows that buying has been strong since the opening, and the buying power continues to be higher than the selling power.
Meaning: The market's buying demand is stronger than selling, and the bullish sentiment is strong.
Upper and lower shadow lines and Yang lines
Cause: The stock price fell after the opening, but there was buying support during the session. Then the bulls continued to push the stock price up, but before the close, there was short-term profit-taking bull selling pressure, but the closing price was still higher than the opening price.
Meaning: Buyers and sellers are fighting fiercely in the market. If such a positive line appears after a sharp rise in the stock price, it is likely to be a signal for a reversal of the stock price, and you should pay attention to the risk of a decline in the market outlook; conversely, if such a positive line appears after a sharp fall in the stock price, it is likely to be a signal that the stock price has bottomed out.
upper shadow line yang line
Cause: Bullish forces were strong at the opening, but encountered resistance from selling orders in the high-end zone, so the stock price appeared to be under high-end pressure, leaving a shadow line, but the closing price was still higher than the opening price.
Meaning: The market outlook is less clear, and the future trend still depends on the length of the positive line entity and the upper shadow line.
lower shadow line yang line
Cause: The price fell after the opening, but encountered buying support during the session, and the buying pushed the stock price all the way to the highest price of the day, and finally closed at the highest price.
Meaning: Buying power is higher than selling power.
Long lower shadow Yang line
Cause: After the market opened, sellers sold aggressively, causing the price to fall. However, buying orders came in during the session, and the buying orders pushed the stock price all the way to the highest price of the day, and finally closed at the highest price.
Meaning: The buying power is released after accumulating for a long period of time. This K line is likely to be a signal of the bottom and strong support.
big negative line
Cause: The opening price is the highest price, and then the price goes all the way down and closes at the lowest price, indicating that selling has been strong since the opening.
Meaning: It means that the selling demand in the market is stronger than the buying demand and the bearish sentiment is strong.
Upper and lower shadow lines
Cause: The opening price fell, and buying support was encountered during the session, but then selling continued to drag the stock price lower.
Meaning: It shows that buyers and sellers are fighting fiercely in the market. If the upper shadow is longer than the lower shadow, it means that the buying power is significantly weaker than the selling power, and the buying momentum is quite weak; and if the lower shadow is longer than the upper shadow, that is It means that many parties fought hard during the session, but were still defeated by the selling pressure. If this negative line appears after the price rises sharply, it will easily form a signal that the stock price will fall in the future. You should pay attention to the risk of decline in the market outlook.
Upper shadow line Yin line
Cause: There was a fierce battle between bulls and bears at the opening. Buyers temporarily gained the upper hand during the session and pushed the price all the way up. However, they later encountered selling resistance in the high-end zone, causing the buyers to retreat and finally close at the lowest price.
Meaning: If the bearish atmosphere is strong and the selling pressure above is heavy, there may be a decline in the market outlook. If such a negative line appears at the end of the long uptrend, there is a high probability that it is a signal of a reversal of decline.
lower shadow line hidden line
Cause: After the opening price fell sharply, it received buying support during the session and drove the price back up.
Meaning: It can be regarded as a strong stock price performance, because the stock price has received strong support from buyers. When such a negative line appears in the high-end zone, there is a possibility that the price will fall back; but if such a negative line appears in the low-end zone, it may It is a signal that the stock price has bottomed out, and the longer the lower shadow line, the stronger the rebound in the market outlook.
Long lower shadow Yinxian
Cause: After the opening, sellers sold aggressively, causing the price to fall. However, intraday buying came in, but it did not push the price above the opening price, and finally closed lower than the opening price.
Meaning: If it is in the low-range zone, it is a long-idle signal; if it is in the high-end zone, it is a reversal signal of long-to-short.
crosshair
Cause:
Meaning: Buying and selling are evenly matched, usually a precursor to price reversal or consolidation. If the upper and lower shadows are long, it means that there is a fierce confrontation between the bulls and the shorts, and there may be changes in the future; while if the upper and lower shadows are short, it means that there may be consolidation in the future. If this K-line appears at the high point of the band, it means that the buying power is weakening and the stock price is likely to fall; if it appears at the low point of the band, it means that the selling force is weakening and the stock price is likely to rise.
one word line
Cause: The market jumps to the upper limit at the opening and maintains the price until the close; or the market jumps to the lower limit at the opening and maintains the price until the close. But if there is no price limit limit, it will not appear.
Meaning: It is a very extreme type, either the bulls are the strongest, or the shorts are the strongest, or they are extremely unpopular stocks.
T line
Cause: The stock price fell sharply at the opening, but buying orders became more active during the session, and the buying force was strong, causing the closing price to be close to the opening price.
Meaning: Although there is selling pressure on the stock price, the following buying orders are strong at the opening, and the stock price may reverse upward the next day. If it appears in an upward trend, it means that the buying power has not stopped, and the stock price may continue to reach the top in the future market. If it appears in a downward trend, it may be a signal of stock price reversal.
inverted T line
Cause: Although the buying momentum in the opening stock price is strong, the upward pressure is heavier. If the buying power is not strong the next day, the stock price may form a reverse downward trend.
Meaning: If it appears in a continuous upward trend, the market outlook may weaken. The longer the upper shadow line left by the K line, the heavier the selling pressure. If it appears in a continuous downward trend, special attention should be paid to the changes on the next day, otherwise it may still continue to fall.
This article introduces common K-line patterns and the long and short implications they represent. The next issue will continue to introduce other common technical analysis indicators, so stay tuned!
