Among all the inversion forms, V-shaped top or V-shaped bottom is the most difficult to distinguish. In most reversals, the existing trend shows obvious signs of slowing down, that is, the market has a period of horizontal extension.
However, in the V-shaped reversal, there is no turning point or transition stage in the market at all, and there is almost no warning before the reversal. The original trend of the market often turns unexpectedly and then moves sharply in the opposite direction. Just like a rubber band being stretched too long, it suddenly bounces back strongly; After this happens, the disadvantaged market participants will take corresponding actions as soon as possible, which will further aggravate the market fluctuation and objectively speed up the movement (the slope is getting steeper and steeper). In the end, the party occupying the active position runs out of strength, while the other party takes advantage of the lack of further driving force in the market to violently counterattack, and the transaction volume increases obviously, usually forming a key reversal day or an intra-island reversal.
1, formation conditions
A necessary condition for the formation of V-shaped reversal is that there must be a trend in advance, and it often happens after the market continues to move sharply, with little or no adjustment along the way, and there have been several gaps in advance. The market seems to have far exceeded the expectations of most normal people, and even the most experienced investors are beginning to get nervous because of the continuous rise. This reversal is often accompanied by major events such as major changes in relevant policies, industry information or company conditions.
2. Fill in and confirm the form
Since the premise is that there is a steep or out-of-control trend, the key reversal date or island reversal is usually an important sign, and accompanied by huge trading volume, the only effective signal is the breakthrough of the existing trend line, and the moving average is of little help because of its nature lagging behind the out-of-control price change. Generally speaking, as long as the breakthrough reaches the effective basic requirements, the shape can be confirmed immediately, and the volume has little influence on whether to confirm the withdrawal, but the requirements for reversing from the bottom or the top are very different, that is, the V-shaped top generally does not withdraw immediately, while the V-shaped bottom often withdraws in a short time, so the original trend line should be a significant resistance or support.
3, after the completion of the movement mode and its amplitude.
After this form is completed, the stock price rises sharply and falls sharply, and usually falls back to the important proportion of the original trend in a very short time (such as 1/3 or 1/2), because the previous trend lacks support or resistance, and many gaps also leave a price vacuum. Because there is no shape, there is no problem of measuring amplitude, and it can only be judged by other methods.
4. Example analysis
In the previous trend of the two cities, there were many V-shaped reversals in individual stocks, and the trend of the composite index of the two cities often appeared in this reversal form, such as the "5. 18" market of 195. Stimulated by the suspension of treasury bond futures trading, the two cities experienced a sharp rise for three days, then fell due to the news on May 23, and then entered a deep adjustment for eight months.