Because of participating in the "diffusion triangle" hype, the profit opportunity is small, but the risk is great. Once the stock price falls below the bottom line of the "diffusion triangle", it can immediately trigger a round of decline, and those who cannot escape may be deeply trapped. Therefore, ordinary investors should try not to participate in trading, and those who hold funds should also lighten their positions. If the "diffusion triangle" breaks, they should sell all the stocks in time and stop the loss. What needs to be explained here is that in most cases, the "diffusion triangle" ends in decline, but there are also a few variations, especially when the upper edge is not inclined upward but develops horizontally, then the stock price may break upward and launch an upward trend. Throw it on the edge of the "diffusion triangle". On the one hand, the "diffusion triangle" decomposes a lot. When you sell stocks when the "diffusion triangle" is about to form, there are always more right times and fewer wrong times. Second, even if the "diffusion triangle" wants to break through, it will show signs in advance. Usually, in the third decline of the pattern, the trading volume will shrink rapidly, indicating that the market sentiment is changing and people's confidence in holding shares has stabilized, which is exactly the opposite of the sharp increase in trading volume in the final stage of the "diffusion triangle". Then the stock price will stop at the upper bound for a period of time, or slightly adjust back, and the decline is obviously weak. Only after these confirmations can the "diffusion triangle" mutate and break through. It's not too late to buy it then. It can be seen that investors have enough time to observe whether the "diffusion triangle" has changed. If the situation does change, they can change their investment strategy in time, making it shorter and longer. This operation method should change from time to time, which is not inconsistent with the general view that "diffusion triangle" is a harbinger of stock price decline.
There are two situations when the "diffusion triangle" breaks: one is to fall below the lower sideline and then go down again after withdrawal; Second, after falling below the lower sideline, it will plummet.
Overview of diffusion triangle
1, function:
(1), most of them appear in the upward trend, the high point is getting higher and higher, and the low point is flat or lower and lower;
(2) The high point connecting line and the low point connecting line intersect on the left side and spread to the right in a trumpet shape;
(3), most of them are decomposed after they are finished, and it is not necessary to put a lot when they are decomposed.
2. Quantity and energy:
(1), irregular fluctuations often occur when finishing.
(2) If you rush to the upper sideline and break through the upper sideline (more than 3%) with the sharp increase in trading volume, there may be a sudden change and continue to rise, but this situation is rare.
3. mentality;
This form is caused by investors' emotional impulse, and investors are crazy about chasing up and down, making the stock price rise and fall normally.
4. Operation:
(1), this form is a harbinger of the imminent collapse, and the upward trend has been exhausted and must be sold;
(2) It can be thrown high and sucked low before it is broken. Once it is found and confirmed to be broken (more than 3%), the damage should be stopped when it falls below the lower sideline or is pulled back to the lower sideline.
5. Measure:
It is impossible to estimate the future decline, but generally speaking, the decline is great after the position is broken.
Practical application skills of diffusion triangle
1, the standard diffusion triangle contains at least three turning high points and two turning low points. These three high points are higher than one, and the two low points can be horizontal or the right low point is lower than the left low point; When the stock price falls from the third high point and its low point is lower than the previous low point, it can be considered that the form is established. After connecting the high point and the low point into a neckline, the area formed by the two lines looks like a horn. Because it belongs to the "five o'clock turn" form, the gentle trumpet can also be regarded as the top of the head and shoulders with the right shoulder high and the neckline inclined downward.
2. In the whole process of the formation of the diffusion triangle, the trading volume has remained high and fluctuated irregularly. Trumpet is caused by investors' impulse and irrational emotions, and rarely appears at the bottom of a falling market, because after the stock price has fallen for a period of time, the market has no popularity, and it is impossible to form this form in the case of a depressed market atmosphere. Irregular trading fluctuations reflect investors' excited and unstable buying and selling emotions, which is also a precursor before the plunge. Therefore, the trumpet shows a downward trend, suggesting that the upward trend will come to an end.
3. The degree of decline of the diffusion triangle is unmeasurable, that is to say, there is no measurement formula to estimate the future decline, but generally speaking, the decline will be extremely deep. At the same time, although the trumpet-shaped right shoulder rose quickly, it fell faster under the right shoulder when it was broken, but the shape did not clearly indicate the time when the market fell. Only when it falls below the lower limit can the pattern be determined, and investors should immediately stop profit or stop loss.
4. The diffusion triangle may also fail, that is, it will break through, especially at the top of the horn, which is connected by two high points of the same level. If the stock price breaks through under the condition of high turnover rate, it shows that the upward trend will continue. But for prudent and conservative investors, "I would rather miss than make mistakes", and I don't have to be too obsessed with this market where risks outweigh benefits. After all, the probability of building a horn head is high.