A Textbook Breakout Arrives on Schedule
2007/12/27 15:15:37
Yesterday I said that because the Bollinger Bands on the 30-minute chart were narrowing, a short-term breakout was imminent. Today's breakout was extremely textbook in its timing. Generally, for this kind of hub breakout, using Bollinger Bands for estimation is quite effective — this has already been covered in the course.
Of course, choosing which level's Bollinger Bands to use for the current hub must be based on the hub's corresponding chart — not every level's Bollinger Band narrowing is meaningful. It's the same principle as MACD's role in divergence judgment. Some people can never figure this out: the decomposition of trend types is fundamental, not MACD. Otherwise, why study trend types at all? You might as well just look at MACD directly. Unfortunately, looking at MACD alone simply doesn't work.
Today's market opened with a downward segment, then ran in an upward segment the whole way until 2:17 PM. From the perspective of 1-minute trend types, there's no divergence issue here. A top divergence must occur after the third buy point of a hub — there hasn't even been a third buy point, so how could there be divergence?
The subsequent moves are simple: as long as the downward stroke's pullback doesn't fall below 5240, the third buy point is confirmed, and only two scenarios follow: 1. A top divergence pullback forms a 5-minute hub; 2. No top divergence, continued hub elevation forming a third 1-minute hub.
Note, purely theoretically speaking, third buy points after the second hub generally have no entry value — you just hold and wait for the entire trend type to complete. According to proper operations, you must have completed your final entry at the first hub's third buy point; everything after that is largely meaningless.
Since if the pullback goes below 5240 again, there would actually already be 9 line segments of oscillation, which would also expand into a 5-minute hub, the subsequent moves — regardless of whether a third buy point forms — have only two choices: 1. Continue 5-minute oscillation. 2. Continue 1-minute hub elevation.
You don't need to predict at all — let the market tell you in real-time. Of course, if you can't read the market's language, that's your problem, not the market's.
From a medium-term perspective, neither scenario presents much of a problem. Why? Even if it oscillates into a 5-minute or even 30-minute hub here, as long as a third buy point eventually appears, it can extend into a 5-minute or 30-minute uptrend type — which is even more bullish from a medium-term standpoint. As for continued 1-minute hub elevation, it merely shifts the eventual inevitably-forming 5-minute hub to a higher position — from the hub perspective, having the first 5-minute hub too high isn't necessarily good. Because once it can't form a second one, it can only be a consolidation trend, which actually means the subsequent pullback force is greater.
The market always moves forward in this interplay of mutual generation and mutual restraint across levels — single-track thinking is doomed to fail.
Of course, from the daily chart perspective, using fractals to judge, there's currently absolutely nothing dangerous to worry about, so you can continue sleeping. Whether the big rally comes tomorrow or after New Year's — there's absolutely no difference. As long as the chart shows no signal, everything remains in hibernation.
Today a certain person continued calling to harass this ID. Looking at that stock's performance on its second day of trading — this ID has nothing to say. Who told me to give someone a chance to catch me out after all this difficulty, leaving behind a great joke: turning down a 12-yuan offer N months ago, and now watching from the sidelines at 12 squared. All I can do now is convert grief into appetite, and get some more PE deals going to torment this person who keeps bothering this ID.
Without these fun things, everything becomes mechanical, and life loses its joy.
Signing off first. See you later.