The share price rose in a lonely way. Even if it keeps rising, each high point will not fall back too much. First, the new high point is higher than the previous one, and then the rebound point is slightly lower than the previous one. In this way, the short lines and high points are connected to form a dome, and there will also be a round shape in the volume of transactions.
After a period of upward trend, the buyer's strength is stronger than the seller's, and the buyer weakens or can only maintain the original purchasing power, which eases the upward trend, while the seller's strength is constantly strengthened. Finally, the power of both sides is balanced, and the stock price will remain in a static state that does not rise or fall. According to expert analysis, if the seller exceeds the buyer, the stock price will fall back. At first, it will only change slowly, and the decline is not obvious. But in the later period, when the seller completely controls the market, the decline will turn sharply, which indicates that the market crash is coming and the future decline will turn sharply. Those prophets will leave before the dome is formed, but there is still a chance to quit after the dome is fully formed.
Sometimes, after the round head is formed, the stock price does not fall immediately, but develops horizontally and repeatedly, forming a wandering area called the bowl handle. Generally speaking, this bowl handle will break through soon, and the stock price will continue to develop towards the expected downward trend.
There will be a circular reversal at the top and bottom of the stock price, which is similar in form and opposite in meaning.
At the bottom, the stock price fell alone. At first, the seller's pressure was continuously reduced, so the turnover continued to decline, but the buyer's strength still stalled. At this time, although the stock price fell, it was slow and small, and its trend curve gradually approached the level. At the bottom, the buying and selling power is balanced, so there is only a very small turnover. Then the demand began to increase and the price went up. Finally, the buyer completely controlled the market, and the price rose sharply, resulting in a breakthrough. In terms of volume, it begins to slowly decrease to a level, and then increases to form a round bottom shape. This model shows that a huge market rise is coming. Investors can chase up at the beginning of the upward trend of the round bottom.
Key points of dome inversion
[1] Sometimes, after the dome is formed, the stock price will not fall immediately. Instead, it develops horizontally and repeatedly, forming a wandering area called the bowl handle. Generally speaking, the bowl handle will be broken soon, and the stock price will continue to develop in the expected downward direction. However, it provides investors with an exit opportunity before falling.
[2] Generally, the minimum decline after the arc top breaks through is the vertical distance from the arc neckline to the highest point of the arc top.
[3] It is difficult to determine the theoretical falling target position of the arc top, and it can only be predicted by support level, percentage and golden section.
[4] The trading volume has no fixed characteristics and generally decreases step by step. At the beginning, the trading volume increased when the stock price rose, and decreased significantly when it rose to the top. When the stock price falls, the trading volume begins to enlarge slightly, and sometimes there is a huge and irregular trading volume, and sometimes it is dome-shaped or V-shaped.
[5] Arc appears in blue chip stocks at most. Due to the stable mentality of shareholders, it is difficult for the strength of both long and short sides to change greatly. The main force is slowly distributed at a high position, and the K line is easy to form an arc top.
Operation strategy
[1] Because the dome shape takes a long time, it doesn't have obvious selling points like other graphs, but there is enough time for investors to withdraw in advance according to indicators such as trend lines and important moving average systems.
[2] The minimum drop of the dome is the vertical distance from the dome to the neckline. After falling below 3% of the neckline and the downward breakthrough is established, the selling strategy can be adopted.
[3] At the end of the arc bottom, the stock price falls to a certain extent, which will cause investors to panic and aggravate the decline, and there will often be gaps or big yinxian lines. At this time, it is a strong shipping signal and should leave decisively.
[4] The volume of the dome is irregular. Once the volume on the right side of the dome is obviously smaller than that on the left side, the probability of dome formation is high. Pay attention to it at any time, and consider selling it in advance if you feel risky.