Hexun Information Huang Bei: Learn to Recognize 5 Types of Trial Markets

On April 8, Hexun Information’s Huang Bei said that many retail investors “met defeat and sank to the bottom” in the last round of the main uptrend. Before the lead player lifts the stock, it often secretly tests the market; if retail investors can’t read it, they’re likely to be “left behind” before the launch. When the lead player accumulates shares in the low position, it does not directly push the price up—instead, it first probes the size of overhead selling pressure, how much follow-on demand there is, and the stability of the shares. The market action during this period has very distinctive characteristics: small candles drifting upward slowly, trading volume moderately expanding, and the bottom gradually lifting. Many people get flustered when they see the consolidation; in fact, this is all the lead player “putting on a show.”

Huang Bei provided a detailed explanation of the five most commonly used market-testing techniques by the lead player, using plain and easy-to-understand language to help retail investors understand: The first is a limit-up test. In the early session, the price suddenly pulls up to the limit-up; then it stops pushing higher and instead falls back to move sideways. This is the lead player testing how light or heavy the selling pressure is and how solid the share positions are; after the test is finished, it will only truly begin the trading trend. The second is a high-open bear candle test. The stock price opens high more than three percentage points; after rising, it directly smashes into the green, and the whole day it moves in a low-level range. If the trading volume increases but isn’t at an extreme (all-time) high, and then later it can quickly snap back and absorb the closing price of that K-line, it means the probe is successful. The third is a long lower shadow test. During the session, it suddenly gets dumped to a key support level, and then it quickly pulls back, leaving a long lower shadow. This is the lead player testing the strength of support from below, and at the same time flushing out less committed shares. If it can hold the support level and then pull back, that is a positive signal. The fourth is a pitfall-and-press test. The stock intentionally breaks below the 60-day moving average; trading volume shrinks to an extremely low level, and then it increases in volume and pulls back again. This is the lead player washing the market while accumulating shares at low levels; once it breaks through the 60-day moving average on expanded volume, the main uptrend isn’t far off. The fifth is a long upper shadow test. After the stock rises and then falls back, it leaves a long upper shadow. This is the lead player probing the pressure above. If, after a period of sideways consolidation, it can increase volume and break through the high of the upper shadow, that is a signal that a rally is about to start.

Huang Bei reminds that everything the lead player does leaves traces; if retail investors understand these market-testing techniques, they won’t be washed out easily, and they won’t chase at the market-testing high point.

(Editor: Cui Chen HX015)

     【Disclaimer】This article only represents the author’s personal views and is not related to Hexun. The Hexun website remains neutral regarding the statements and judgment of viewpoints made in the text, and provides no express or implied guarantees regarding the accuracy, reliability, or completeness of any content contained herein. Readers are asked to use this information for reference only and assume all responsibility themselves. Email: news_center@staff.hexun.com

Report