In the stock market, we often encounter some special forms. Once they appear, experienced investors will have a quick response to them. Breaking down is a very common and important one. Today Let’s have a brief understanding of it.

What does it mean to break the position and fall?

The decline is well understood, that is, the decline in stock prices. Breaking a position refers to falling below an important position in the technical form. It means falling below the key support level and the trend is bearish. We often use trend charts to analyze the future price trend, which often uses auxiliary means such as average lines to judge, because these will form A key price. If the actual price breaks through this key price downward, we usually call it a breakout.

What are the types of position breaks?

1 Support breaking: For different technical indicators, support breaking has different meanings. For example, the breaking of the MACD indicator usually means that a round of mid-line adjustment is coming, and the breaking of the lower support line of the Bollinger Band often means that there is an opportunity for short-term bargain hunting.

2 Moving average breaking: A stock or indicator falling below the moving average means that it has reached a periodic top, and a round of decline or adjustment is about to come. Especially when the long-term moving average is broken, it usually indicates that a bear market is about to begin. will come.

Break at 3 points: This situation is mainly found in the market index. Certain key integer points and historical bottoms have very important psychological significance. After falling below, it will lead to a large number of bargain hunting. Funds are a signal of a turning point in the market.

When the stock price or index breaks at a high level, it is usually a reversal of the mid- to long-term trend. This generally means that we should stop the loss and get out in time; while a break at a low level accelerates the process of bottoming out. This is often a good time to open a position. However, it should be noted that due to many uncertain factors in actual operation, we have to judge based on the actual situation.