For every investor in the stock market, the main purpose of entering the market is to make a profit. No one comes to the stock market with the goal of losing money. Although the 28 law of the stock market has been witnessed by generations of investors, there is still a steady stream of investors entering the stock market because they think that they will be lucky and that with their ingenuity, they will definitely be able to make money. However, the harsh reality made groups of so-called smart people eventually lose everything.
Is it really hard to make money in the stock market? Of course not. I have answered countless investor friends with such questions. When I asked them how much they knew about the stock market, I understood why they were losing money. Many investors don't know anything about the stock market before entering the market, and just hear from friends that they can make money and come in; Some investors have been speculating for most of the year and do not know how to see the trading volume, let alone understand the K-line graph. Can such investors make money? In fact, stock trading is not difficult, as long as you are willing to learn, master the most basic knowledge, and then be good at summarizing investment experience and lessons, it is only a matter of time before you make money. If you blindly guess out of thin air and rely on feelings to buy and sell, you may make a temporary profit, but you will eventually lose a mess.
First, the bullish engulfing pattern
A bullish engulfment consists of two candlesticks, the first being a black candlestick and the second being a white candle. The body of the white candlestick should include all of the previous black candlestick's body, but it does not necessarily include the upper and lower shadows of the previous candlestick. This is shown in Figure 1-1.
Meaning: The market was originally in a wave of decline, the first candlestick engulfed by bullishness still continues the original downtrend, and there are no red signals here. But the appearance of a second candlestick marks the possibility of a reversal. The second candlestick opened below the closing price of the previous candlestick, and the direction seemed to be in favor of the bears. However, the price did not continue the original downtrend and ran far, but turned upward, and the forces of the bulls were still very strong, and the increase exceeded the physical range of the first candlestick. At this time, the confidence of the bears begins to gradually shake, so the probability of a reversal increases significantly. The larger the body of the second candlestick, the higher the probability of a reversal.
Operation guide: In the face of a bullish engulfing pattern, aggressive traders can open the next day to enter the market and buy stocks, conservative traders can see if the stock market changes the next day and really rises. If the next day is a white line, the probability of the stock rising further increases and traders can look for a low to enter the market on the third day to buy the stock.
Case Study:
Figure 1-2 shows the daily K-line chart of the Anhui Tong Expressway. It can be seen from the chart that the stock price has fallen all the way, and the lowest price of the K line pointed by the arrow in the chart is 5.38 yuan, which is also the lowest point of the recent stock price. The candlestick of the day is a white candlestick and contains the previous day's black candlestick body, forming a bullish engulfing pattern. The stock price has risen all the way since the next day, reaching a maximum of around 6.88 yuan, and if traders enter the market to buy the stock the day after the bullish engulfing pattern appears, the return is still quite large.
Figure 1-3 shows Vanke's weekly candlestick chart. As you can see from the chart, the stock price reached its lowest point at 6.55 yuan. At the candlestick pointed by the arrow, the previous $6.55 black candlestick is combined with this positive candlestick to form a bullish engulfing candlestick pattern, from which the stock price turns from falling to upward. If the trader enters the long market after the formation of the K-line pattern, he has grasped the bottom of the market and can obtain a large number of rising profits, and the profit margin is quite large.
Second, the bearish engulfing pattern
A bearish engulfing pattern is similar to a bullish engulfing pattern and is also made up of a combination of two candlesticks. Figure 2-1 shows the basic pattern of the bearish engulfing pattern. The bearish pattern requires a large period of rising market before it, the first candlestick in the candlestick pattern is a positive candlestick, the second candlestick is a negative candlestick, and the body of the second candlestick should contain the entire body of the previous candlestick, but not necessarily the shadow. A bearish engulfment is roughly the same as a bullish engulfment, except that the candlestick is exactly the opposite color, so the meaning it represents is also the opposite.
Meaning: The market was originally in a large upward trend, the first candlestick in the bearish engulfing appeared, still continuing the original market trend, as a white line. There is no signal of a reversal in the market at this point. But when the second black candlestick of the bearish candlestick pattern combination appears, the reversal signal appears. Because the opening price of the next day was higher than the closing price of the previous day's candlestick, the market was still rising, but the price was strongly suppressed by the bears not long after the rise, and the stock price fell rapidly, falling far more than the previous day's gain. The confidence of the bulls is beginning to waver, can the price continue to rise? Has the market started to reverse? Some timid traders or investors with less money began to sell their stocks and pocket the profits they had earned, which was equivalent to helping the bears, and the price would fall further. In general, if the body of the negative candlestick is very large, much larger than the body of the previous candlestick, the probability of reversal is higher.
Operation guide: When encountering a bearish engulfing pattern, conservative traders sell their stocks at the opening of the day after the pattern appears, putting profits in their pockets. Aggressive traders, after the pattern is established, see if the stock market really falls, and then look for the right opportunity to sell the stock in their hands.
Case Study:
Figure 2-2 shows the daily candlestick chart of Renhe Pharmaceutical. The candlestick pointed by the arrow in the chart forms a bearish engulfing pattern together with the previous day's daily candlestick, ending the previous period of the rally. After that, the stock price fell sharply, and the next day it fell from more than 20 yuan to about 12 yuan. If you do not sell the stock immediately after the candlestick pattern is formed, the previous profit will not only be wiped out, but will also turn into a loss.
Figure 2-3 shows the daily candlestick chart of the Eastern Market. The chart shows that the stock price has risen all the way from the lowest of 4.41 yuan. The candlestick pointed by the arrow in the figure is a long black candle. The body of the black candlestick contains not only the body of the previous candlestick, but also the body of the previous several white candlesticks. It shows that the pressure on the bears near this price is very strong. Many parties have once again encountered heavy setbacks. The fruits of the victory of many sides in the previous days were completely lost on this day. The probability of a market reversal is extremely high. In the days since, the stock price has indeed fallen all the way, falling to around 4.41 yuan at its lowest. If the bulls do not sell their shares in time and take profits, all the previous surpluses will be lost.