Due to the repeated appearance of this price range in the previous stage, a large volume has been accumulated. When the market moves closer to the support line from top to bottom, the profit-making chips of short sellers have been cleared, and there is no pressure to sell the short chips in their hands; People who do more use low money to absorb and form demand; The indecisive person has been trapped, and the chip lock is not easy to cut the position. Therefore, in this price range, supply is less than demand, which naturally forms a strong supporting foundation. In addition, because the market has turned back here many times, it has also established the price range of investors' psychological support. As long as there is no particularly bad news, the market will rebound.
Technical analysis defines the price range with large cumulative turnover as "transaction intensive area", that is, there is a high turnover rate in this intensive area. In order to make a profit, buyers in dense areas need to wait for the stock price to rise above this cost range. These buyers are all chip holders. As long as they do not lose confidence in the future, they will not throw chips in this price range. It is difficult for the market to fall below this price because the chip holders are reluctant to sell. On the other hand, due to intensive transactions, the amount of money held by the empty side increased, and the chips in the hands were exhausted, that is, the supply of chips in the market shrank. Although some people who lose confidence in the future will still throw chips, it will not become a climate. Even if the support line is temporarily broken, as long as there is neither the cooperation of trading volume nor all kinds of bad news, the price will return to the top of the support line and the psychological support of investors will be enhanced again.
After the market is temporarily supported in the transaction-intensive area, there are two possibilities in the market outlook:-,it is a rebound; Second, the majority of chip holders lost confidence and watched a lot of selling in bad trends, that is, the support line was effectively broken and the market continued to fall.
Support lines are not only generated in transaction-intensive areas. When the market falls to 50% of the original rising wave, it will catch a little breath, and there will often be a support line in this interval, which is actually caused by the psychological factors of investors. Technical analysis says that this rising wave (or falling wave) returns to the starting point as the principle of symmetry. In addition, the staged lowest price is often the psychological support line of investors.
I would like to remind you that there is no absolute support or pressure in any support line or pressure line, but the probability of support or resistance in this position is relatively large, and the real-time trend of the market is the only correct psychological or operational response of mass investors.