Trading Tips 1
Trading Tips 1
Trading Tips 1
Although there are signs of suppression at a higher level of the index, this situation is completely
within our prediction. I don't think the NIFTY index can quickly break out of the shock range between
21,200 and 22,100 in the short term. On the contrary, I think the index will run within this range
for a long time.
Within the range of shock, we don't need to care about where the index is or the rise and fall of each
day. The meaning of range shock is the fluctuating without order. Don't worry, because capital needs
to chase profits, so whether the index rises or not, some stocks that should rise will rise independently,
and we can continue to make profits.
The premise for capital to confirm the safety of the market is not just that the market rises every day,
but that it operates stably or rises at certain specific positions, which can be considered as a safe stock
market. We can recall that the stocks we have recently made profits, whether it is medicine, real
estate, or energy, these profits were all obtained when the index was horizontally adjusted.
Judging from the trading volume of the daily line, the trading volume is relatively large today, but the
range of the bearish candlestick is not large, indicating that the carrying capacity of the buying funds is
increasing. More investors in the market believe that the time and structure of the adjustment are
getting closer and closer to the end, so the buying sentiment is more positive, resulting in the index
not falling after the trading volume increases.
Compared with the market on January 23rd, with the same trading volume, although both indices are
bearish candles, the size is easily distinguishable. Because there was no reference for any support in
the previous decline, funds dared not buy. After several trading days of adjustment, the supporting
force is becoming more and more obvious, so under the influence of the same selling force, the
market only falls slightly.
From the above content, we know that the supporting force of the market is getting stronger and
stronger. Under the premise of no unexpected events, the low point of the index will move upward
gradually. Because the buying sentiment is positive and the profit-making effect is obvious, even at a
historical high, the stock market in India is very safe, and our position profits will continue!
Our stocks in energy, medicine, and real estate are all rising, but the decline of railway infrastructure
stocks has affected the trend of KCP. The stocks in the infrastructure sector are a short-term
adjustment and there will be no medium- and long-term risks. We will continue to hold them and
maintain an optimistic attitude. If it falls to 170 rupees, we can continue to buy.
170 rupees is not only the support at the daily line level, but also the support at the weekly line level
and the historical long-term high point of the stock price. In January this year, the stock price broke
through the historical high of 170 rupees with an enlarged trading volume and operated stably above
170 rupees, so the pressure has become support. Currently, due to the decline of related stocks, KCP
is passively running weakly.
Stocks in the stock market are correlated. When the main stocks in the industry fall, the buying
sentiment of other stocks will decrease, or even there will be selling behavior. But in a bull market, as
long as there is a bull market basis in the industry and the company, this kind of falling behavior is
likely to be falsely guided by emotions.
Because all kinds of markets are composed of people, and people's thinking will not always remain
rational, so the market has the characteristics of blindness, spontaneity, and lag. This is common
sense in economics and also applies to the stock market. When the stocks in the infrastructure sector
stop falling, they will rise again, so we will continue to hold KCP and be patient.
Recently, I shared with you some practical trading applications in the moving average system, and I
hope everyone has mastered them and can use them in trading. Tonight, I will share with you the
buying method of "valley pattern" in the moving average system. The valley pattern is composed of
the intersection of three moving averages, forming an irregular triangle with an upward angle. It
appears in the early stage of the rise and is a signal of hitting the bottom, indicating that the market is
bullish in the future.
We need to pay attention when trading. The valley pattern is the buying point for aggressive investors,
and the longest moving average should be used as the stop-loss point. If the moving average is broken,
it should be stopped immediately. The following figure shows the technical chart of HEROMOTOCO's
rapid rise after the valley pattern on April 6, 2023. We can see the triangle in the figure.
The valley pattern refers to when the stock price stops falling and rises, driving the 5-day moving
average to cross above the 10-day and 20-day moving averages, and the 10-day moving average
crosses above the 20-day moving average. The three moving averages intersect to form an irregular
triangle with an upward angle. Among the three intersections, at least two must be golden crosses.
The shape looks like a valley, and the market is bullish in the future.
After the formation of the valley pattern, the average cost of the holders who buy within 5 days
exceeds the 10-day moving average and the 20-day moving average, and the average holding cost of
the holders who buy within 10 days exceeds the 20-day moving average. This indicates that in a
shorter cycle, traders are willing to buy stocks at a higher cost, and the willingness of the holders to
sell is not strong, and the stock price rises firmly.
If the valley pattern appears in a long-term downward trend, then the stock price may go out of a
larger mid-term rebound. If it appears in the mid-term adjustment of the long-term upward trend,
then the stock price or index will continue to move forward along the basic trend of the bull market,
so the valley pattern is a bullish signal.
Technical characteristics of the valley pattern:
(1) It appears in the early stage of the mid-term rebound in the long-term downward trend, or in the
early stage of the medium- and long-term upward trend, or at the end of the mid-term adjustment in
the long-term upward trend.
(2) Three moving averages intersect to form an irregular triangle with an upward angle.
(3) At least two of the three intersections are golden crosses.
The reliability of any technical formation that sends out medium and short-term trading signals
depends on whether the technical formation that sends out the signal is in a long-term upward trend
or a long-term downward trend. In a long-term upward trend, all medium and short-term buy signals
are more reliable, while in a long-term downward trend, all medium and short-term sell signals are
more reliable. So our trading method is: in a long-term upward trend, we focus on buying and holding
shares; in a long-term downward trend, we focus on selling and waiting.
When traders see the valley pattern, the first thing they need to do is to determine the long-term
trend of the stock price. If the 60-day moving average goes down and the valley pattern is formed, it
only indicates that the stock price trend is downward, only starting a mid-term rebound, which is a
negative buying point for short-term traders. Since the rebound confirmed by the valley pattern is
generally relatively large, there is often a larger profit at this time
From the perspective of the moving average, the 60-day moving average suppresses the short-term
moving average and the stock price from above, indicating that the stock price is in a bear market,
and there are a large number of trapped chips that block the rising space, so before it is confirmed to
be a long-term bottom, the reliability of the valley pattern as a bottom signal is not high. After the
rebound ends, the stock price may also fall to a lower level. It is only suitable for short-term
trading by traders.
When a valley pattern is identified, if the 60-day moving average is rising, it indicates that the stock
price is in the early stage of a medium- to long-term upward trend, or in the middle of a long-term
upward trend. At this time, the bottom signal of the valley pattern is very safe, indicating that the
adjustment is over, and the later market will continue to rise. The magnitude of the rise will be
greater after the adjustment. At this time, it is a good opportunity for us to buy.
The figure below shows that after TITAN's stock price breaks below the 60-day moving average, the
stock price continues to fall. After the stock price rebounds at the bottom and breaks through the 60-
day moving average upward, a valley pattern appears. When the valley pattern is completed, the 60-
day moving average just turns to rise, indicating that the stock price is very likely in the early stage of
a medium- and long-term upward trend. Traders can buy with large funds and hold more positions.
Special reminder:
(1) When the 60-day moving average is on the rise and the signal of the valley pattern appears at the
same time, we can increase the funds for buying.
(2) The three crossings of the three moving averages in the valley pattern must have at least two
golden crosses, otherwise, it is not a valley pattern. If all three moving averages are golden crosses
when they cross each other, the reliability of the signal is stronger. Generally, the valley pattern
formed by the golden crosses of the three moving averages mostly appears at the end of the mid-
term adjustment in the long-term upward trend.
As shown in the figure below, in April 2021, the stock price was in the middle of consolidation, and the
60-day moving average was basically translated, indicating that the area where the stock price
consolidation was located was the long-term trend floor or the mid-term adjustment of the long-term
upward trend. At this time, the stock price broke through the 60-day moving average upward, and
after the 60-day moving average rose, a valley pattern of the three-line golden cross was formed, with
a strong bullish signal and a large increase in the stock price in the future.
(3) After the stock price forms a valley pattern, there usually will be a small adjustment, but generally
it will not break the valley pattern. We can buy during the pullback.
(4) During the formation of the valley, if the trading volume gradually increases, it means that the
bulls continue to push up the stock price in this process. In such a case, the bullish signal of the valley
pattern will be even stronger.
(5) In fact, the valley pattern is the process of multiple moving averages changing from a bearish
arrangement to a bullish arrangement. If the bullish arrangement is disrupted by a future stock price
peak and pullback, it means that the rising trend is over, and we should sell the stocks in our hands.
We have finished sharing all the basic applications of the moving average. Friends who want to watch
the previous content of the moving average can get it from me or my assistant. After we analyze the
fundamentals of the industry and the company, the technical theory is an important basis for our
buying and selling, and it is also an auxiliary system for us to obtain profits. I hope everyone can apply
it in practice. That's all for tonight's sharing. See you during trading time tomorrow!