Lightyear FX: Financial Analyst, Financial Media Person, Amateur Research Trading Technical Analysis. Stay on top of the latest cutting-edge technology information and share the most in-depth industry insights with you. The following content is from Just2Trade.
1. Use the moving averages of different periods to select stocks
1.5-day moving average stock pick
The 5-day moving average reflects the fundamental trend of the stock in the past 5 days, and the stock price breaks above the 5-day moving average upwards is an important buying opportunity, and you can consider buying at the low level of the next trading day. Otherwise, wait for the moment and buy when the next low appears.
2. 10-day moving average stock pick
The 10-day moving average reflects the basic trend of the stock in the past 10 days, and in practice, when the stock price runs above the 10-day moving average, the trend of the stock price is upward, and the stock price will rise, which is a very important time for investors to choose stocks to buy.
3. 20-day moving average stock picking
The 20-day moving average reflects the basic trend of the stock price in the past 20 days, and if the stock price candlestick chart moves from below the 20-day moving average to above the 20-day moving average on a given day, it indicates that the market buying power is stronger than the average market buying power in the past 20 days, and investors can buy the stock at this time.
4.30-day moving average stock pick
The 30-day moving average also reflects the basic trend of stock prices over the past 30 days, and in a falling market, the moving averages tend to be in a bearish alignment. When the stock price rebounds above the 10-day line, the 30-day line becomes an obstacle to the bullish rise. If the stock price effectively breaks through the 30-day moving average and the downward speed of the 30-day moving average slows down, there are signs of flattening or even upturning, which is often a sign of the end of the medium-term downtrend and the beginning of a new round of medium-term upward market.
5. Stock selection timing
1) The 5-day, 10-day and 30-day moving averages are in a bullish alignment, which is the time to buy stocks.
In this kind of portfolio, if the stock price can close above the 5-day moving average with a small positive report for more than 3 consecutive days, and the trading volume can be moderately amplified, the market will generally accelerate the upward trend.
2) The best time to buy is when the stock price breaks above the 5-day, 10-day and 30-day moving averages.
In the medium-term downtrend, the 5-day, 10-day and 30-day moving averages are generally in a bearish arrangement, but at the end of the medium-term downtrend, the bearish selling pressure is reduced, the stock price decline slows down significantly or even begins to move sideways or rebound slightly, the 5-day and 10-day moving averages first flat, and then the 5-day moving average crosses through the 10-day moving average to form a golden cross and is bullish. The three moving averages become a strong support line when the stock price pulls back, thus confirming the end of the medium-term decline and the official start of the upward trend.
3) When the 5-day, 10-day and 30-day moving averages diverge from the adhesive shape and move upward, it is the best time to buy.
In the case of sideways consolidation, it is difficult to determine the direction of the future breakout because the moving averages are mostly glued and intertwined. Moreover, sideways consolidation can occur in the middle and bottom of a downtrend, as well as in the middle and top of an uptrend, which makes it more difficult to judge. However, in the middle of an uptrend and after a long-term decline, the sideways consolidation formed in the low-price area is a time to buy in the short and medium term, once it breaks upward, and the 5-day, 10-day and 30-day moving averages also diverge from the adhesive shape and move upward.
2. Use trend lines and orbital lines to select stocks
1. The short-term downward trend line breaks upwards and is a short-term buying opportunity
Whether it is a long-term, medium-term or short-term downward trend line, if it is broken by the stock price upward, it is a time to buy.
In practice, the short-term downtrend line can be divided into three situations: one is the short-term downtrend that occurs in the medium-term downtrend, the other is the downtrend formed when the stock price pulls back in the medium-term uptrend, and the other is the short-term downtrend that occurs in the medium-term sideways trend.
2. In a medium-term uptrend, it is a time to buy when the stock price pulls back without breaking the upward trend line and stops falling and rises
In a medium-term uptrend, the stock price moves upwards from its lows and highs, and the two obvious lows that move upwards are connected into a straight line that slopes to the upper right, which is the main upward trend line, which will become the support for the stock price when it pulls back. When the stock price pulls back to the line every time it does not break the line and then stops falling and rises, it is a short-term buying opportunity in an uptrend.
3. When the stock price breaks above the horizontal trend line upwards, it is a time to buy
The stock price runs for a long time, and every time it rushes to a certain price, it is blocked and pullbacked, and these several highs are connected to form a horizontal trend line, and when the stock price breaks through the horizontal trend line, it is the time to buy.
4. In the box with a large upper and lower space, it is the time to buy when the stock price falls back to the bottom of the box to get support
The box is composed of a horizontal support line connected by two parallel valleys of the horizontal trend and a horizontal pressure line formed by two parallel peaks, and the range between the horizontal support line and the horizontal pressure line is called a box. The horizontal support line is called the bottom of the box, and the horizontal pressure line is called the top of the box. Generally speaking, in a horizontal trend, when the distance between the top of the box and the bottom of the box is not small and there is a considerable price difference, the short-term operator can grab the rebound in the box. When the stock price falls and touches the bottom of the box, due to the support of the horizontal support line, the stock price is unlikely to fall further, and the short-term operator can buy the stock at this time.
3. Use the orbital line to select stocks
1. Breaking through the upper band of the descending channel upwards is the time to buy
The downward trend line is a straight line formed by the two peaks of the downward trend, when the downward trend line is determined, and then choose the valley between the two peaks that constitute the downward trend line to make a straight line parallel to the downward trend line, and the range between the parallel straight line and the downward trend line is called the descending channel. The descending trend line is called the upper band of the descending channel, and the straight line parallel to the descending trend line is called the lower band of the descending channel. Generally speaking, when the stock price falls to the lower band of the descending channel in the process of falling, it will produce support and rebound, and when it rebounds to the upper band of the descending channel, it will encounter resistance and fall. When the stock price finally breaks through the upper band of the descending channel, it declares the end of the downtrend and the beginning of the uptrend, and becomes an important buying opportunity. Short-term traders should also consider the stock price falling in a descending channel and buying when it encounters the lower band to gain support.
2. Breaking through the upper band of the ascending channel upwards is the time to buy
In an uptrend, sometimes the stock price rises in the early stage along a certain upward channel in a rhythmic manner, that is, it forms obvious support in the lower band of the rising channel, and the stock price falls back when it encounters resistance in the upper band of the rising channel. However, at the end of the uptrend, the main force pulls sharply, and the stock price breaks through the pressure of the upper band of the ascending channel upward, and if the upper band is effectively broken, it indicates the acceleration of the uptrend, and the track line will become steeper. The increase in a short period of time is often considerable, and if you grasp it properly, you can make huge profits in the short term.
Generally speaking, the stock price shows the trend of the rising channel, which is very valuable for investors, especially the rising channel stocks with large orbit space, which is most suitable for taking a short-term or swing operation strategy of buying low and selling high in the channel.