Application principle of Baota line
1, after the Baota line turns red, the market outlook often has the opportunity to extend a rising market, which is regarded as a buying signal;
2. After the Baota Line turns green, the market outlook usually continues to decline for a period of time, which is regarded as a selling signal;
3. When the market is in the consolidation stage, it tends to turn red or green slightly, which can be ignored;
4. When the stock price is at a high level and there is a long green breakthrough, the position should be closed decisively.
Buying method of back leveling higher than front leveling on Baota line
"The back flat bottom is higher than the front flat bottom" means that after the stock price drops by one, two adjacent groups of graphs with the same bottom successively appear at the low price of the pagoda line, and the low points of the two pagoda lines with the same bottom of the latter group are higher than those of the previous group and turn red.
There are many forms of "the rear flat bottom is higher than the front flat bottom". The most common is that the front and rear flat bottom are composed of two pagoda lines, the two pagoda lines in the front flat bottom are all negative lines, the first pagoda line in the rear flat bottom is negative line, and the second one is the red line that turns from the lower yin to the upper yang.
It should be noted that the core of "the rear flat bottom is higher than the front flat bottom" is "the rear flat bottom is higher than the front flat bottom", and only the trend that the rear flat bottom is higher than the front flat bottom is effective.
Operating instructions: "The rear flat bottom is higher than the front flat bottom" is indeed an ideal reference index for buying, which is suitable for short, medium and long lines. In order to give full play to the function of this index and avoid the occurrence of unexpected risks, the following points must be paid attention to in specific application:
(1) In the trend of "the rear flat bottom is higher than the front flat bottom", the buying point on the bonus day is very important. Under normal circumstances, it is safer to buy the next day after dividends, but some stocks rose sharply on the day of dividends, and sometimes the increase between dividends and closing was as high as 5%. If you wait until the next day to buy, the follow-up income will be greatly reduced, and some even can't make the difference, leading to the failure of the operation.
(2) The trend of "the rear flat bottom is higher than the front flat bottom" can appear anywhere, but when it appears at a high level and on the way to a falling market, the increase of the rear flat bottom is limited, and sometimes the price difference cannot be made, so it is best not to do it to avoid being stuck.
How to distinguish whether the pattern is at a high level or on the way down?
First, we can judge the position of "the back level is higher than the front level" by observing the recent rise of the stock price. The increase of stock price can help us to judge whether the stock price is at a high level to some extent. If the stock price rises more than 10% recently, it means that the trend of "the rear flat bottom is higher than the front flat bottom" is mostly at a high level at this time, so we should be cautious.
The second is to judge the position of "the rear flat bottom is higher than the front flat bottom" by the trend of the 30-day moving average. If the 30-day moving average moves from top left to bottom right, then the trend of "the back level is higher than the front level" is on the way down. After the rebound, the stock price will continue to fall, or it will be deeply stuck.
(3) After the trend of "the rear flat bottom is higher than the front flat bottom" is formed, the stock price will generally rebound, but in some cases there will be a trend of falling instead of rising, which will make investors suffer losses. In this case, you should stop at the pre-set stop price to ensure the safety of funds.
Parameters can be set for the indicators of Baota Line, usually set to 3 days (or 5 days).
When the closing price is higher than the highest price in the previous 3 days (or 5 days), it is regarded as a buy signal.
When the closing price is lower than the lowest price of the previous 3 days (or 5 days), it is regarded as a selling signal.
In practice, there is still a situation that "the three flat bottoms (tops) turn red (green) for buying (selling)".
Specifically, the three flat bottoms turn red: the moving average goes flat, seeing more and not doing more; The flat bottom turns red and the moving average goes up. See more and do more. Three flat tops turn green, the moving average goes flat, and the bears are not short; Three flat tops turn green, moving averages go down, and bears.
Precautions:
1. Once the weekly Baota line turns red, it will at least maintain the upward trend around;
2. The Baota line can be used with the moving average index, and the effect is better;
3. The Baota Line works better with the 5-EMA, and the signals of buying and selling, holding shares and holding money will be better;