Attention! Once a stock hits the limit-up and then falls back, will you leave or stay? When a stock hits the limit-up, it often indicates that the main force is washing out positions or unloading shares, but many cannot distinguish the logic behind them. A limit-up falling back indicates a divergence, and it is important to determine whether it is the main force or retail investors. If you still don't know how to distinguish this, be sure to watch this episode carefully.
As usual, please like, save, or comment 888 to support, as Mulan shares stock trading tips daily to avoid not being able to review them later. In summary, the core reason for the falling back is the process of consensus turning into divergence.
1. Washing Out Type Falling Back
The core logic of the main force is that after the stock price hits the limit-up early on, a falling back occurs, causing those with weak hands to think the stock price will continue to drop and to hand over their shares, resulting in a psychological turnover of shares.
This washing out technique generally occurs when the stock price is low or at the early stage of an upward trend, with the stock price not being very high. From the perspective of trading volume, at the moment of falling back, the trading volume will increase, but subsequently, the trading volume is often in a shrinking state, indicating that there is not a large turnover of shares; from a pattern perspective, the stock price from limit-up to falling back will generally have a large decline, usually will not break the average price line of the day or significant support levels, with a small decline and no signs of a plunge. After the main force finishes washing out positions, it may continue to lock the limit-up.
2. Unloading Type Falling Back
The logic of the main force is to let the market's enthusiasm rise so that they can secretly unload shares. Therefore, the stock price is generally at a high level and has already had a good increase before it appears. This leads to a significant increase in trading volume on the intraday chart, possibly a huge volume, with a large turnover of shares. In the process of decline, rebounds are often weak; if the main force is eager to unload shares, it often results in a one-sided decline. This is the distinction based on trading volume and patterns; when the stock price hits the limit-up, the order volume at the price level is often very small, indicating that the strength of buyers is not strong.
Alright! The above is about the various manifestations of whether the main force is washing out positions or unloading shares when a falling back occurs after hitting the limit-up. Below, I have prepared two case charts, which I suggest you remember. I hope this will inspire and help everyone and it is the most basic content that you must thoroughly understand. See you in the next episode!
