Understanding Trend Zone Analysis: A Simple Guide for Investors.

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1. Trend Zone Characteristic Analysis:

  1. Bullish Zone: The bullish zone represents a region where there is a strong potential for buying activity, indicating an overall robust buying strength. It encompasses both an ‘uptrend’ and a ‘correction trend.’ In the uptrend, there is a strong buying intensity leading to significant upward momentum with occasional minor downward movements. On the other hand, the correction trend indicates a weakening buying strength, resulting in limited upward movements and gentle declines or temporary downward trends. When the trend consistently remains within the bullish zone, the uptrend and correction trend alternate, creating a stair-step upward momentum. This pattern maximizes cumulative gains.

  2. Bearish Zone: The bearish zone signifies an area where there is a strong potential for selling activity, indicating a persistent selling pressure. It involves a ‘downtrend’ and a ‘rebound trend.’ In the downtrend, there is a strong selling intensity leading to significant downward momentum with occasional minor upward movements. Conversely, the rebound trend indicates a weakening selling intensity, resulting in limited downward movements and gentle rises or temporary upward trends. When the trend consistently remains within the bearish zone, the downtrend and rebound trend alternate, creating a stair-step downward momentum. This pattern maximizes cumulative declines.

2. Analysis of Trend Zones and Intensity for A, B, C on the Chart:

  1. A(1~2): The trend line ‘A’ serves as a support line in the Bullish zone, indicating an ongoing trend. At point 1, the price entered the Bullish zone and quickly transitioned into a correction trend, which continued predominantly. At point 2, the price didn’t show signs of entering an uptrend and closed near the end of the Bullish zone, indicating a potential shift towards the Bearish zone.

  2. B(3~4): The trend line ‘B’ acts as a resistance line in the Bearish zone, indicating a continuing downtrend. After entering the Bearish zone at point 3, the price displayed a downward trend for six days. Subsequently, there was a temporary entry into the Bullish zone, followed by another downward trend before a rebound trend at position 4. The price closed well within the Bullish zone, suggesting a possible attempt to re-enter the Bullish zone.

  3. C(5~6): The trend line ‘C’ functions as a support line in the Bullish zone. At point 5, the price entered the Bullish zone. The forecast indicates a continuation of the trend within the Bullish zone for the next 10 days. However, there is a possibility of temporarily entering the Bearish zone five days later, depending on the market conditions. If the uptrend resumes, it is likely to be short-lived. Around point 6, the uptrend may conclude, leading to an overall correction trend and a potential entry into the Bearish zone. If the trend enters the Bearish zone, it could break the current support line ‘C’ at $17.

(Note: The trend line serves as the 0% boundary line distinguishing the Bullish zone from the Bearish zone.)



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