Bottom deviation means that the price trend has reached a new low, but the technical indicators have not. This deviation may suggest that the downward trend of prices is weakening and there is a chance to reverse the upward trend. For example, suppose the price of a futures product has been falling, but at the recent low point, the technical indicators have not hit a new low, but started to rise. This situation may indicate that selling pressure is gradually reduced, buying is actively entering the market, and prices are expected to reverse upward. Investors can pay close attention to this signal and buy at the right time.
On the contrary, the top deviation means that the price trend has reached a new high, but the technical indicators have not. This deviation phenomenon may indicate that the driving force of price increase is weakening, and there will be an opportunity to reverse downward. For example, suppose the price of a futures product has been rising, but at a recent high point, the technical indicators did not hit a new high, but began to decline. This situation may indicate that buying is gradually decreasing, selling pressure is beginning to increase, and prices are expected to reverse downward. Investors can pay close attention to this signal and sell it at an appropriate time.
In practice, investors should pay attention to several points. The deviation signal is not absolutely accurate, and it needs to be comprehensively analyzed in combination with other technical indicators and market environment. Deviation signals usually take some time to confirm, so it is not advisable to enter or leave the site prematurely. False breakthroughs may also occur when deviating from the signal. Investors should be vigilant and avoid blindly following signals. Investors should reasonably control positions and risks to avoid blind operation due to a single signal.
In addition to technical indicators, there is a deeper market psychological drive behind the departure signal. When the bottom deviates, investors' mood may be pessimistic and disgusted because of the continuous decline, but the low technical indicators may mean that the bottom of the market is gradually formed and buying begins to actively enter the market. When the top deviates, investors' mood may be optimistic and impulsive because of continuous rise, but the technical indicators are no longer at a new high, which may mean that the top of the market is gradually formed and the selling pressure begins to increase. In addition to learning to use technical indicators, investors also need to understand the influence of market psychology and emotions on price trends.
In a word, bottom deviation and top deviation are commonly used technical analysis tools in futures trading. When using these tools, investors need to comprehensively consider other factors and reasonably control their positions and risks. There is also the drive of market psychology and emotion behind the deviation signal, and investors need to understand the influence of these factors on the price trend. Through continuous study and practice, investors can gradually improve their ability to identify bottom deviation and top deviation, and get more success in trading.