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Judging the Nature of Individual Stock Adjustments Based on Technical Patterns

In the stock market, individual stock prices often experience adjustments and pullbacks during the uptrend process. These adjustments may be short-term or long-term, and they may even represent a change in trend. Therefore, accurately determining the downtrend and adjustment time of individual stocks is crucial for investors. This article will analyze some common technical patterns of declines to help investors judge trends.

How to Determine the Nature of Individual Stock Adjustments from Technical Patterns​

  • Short-term adjustment: If a stock experiences a few days of decline after a sustained uptrend but remains within the upward channel, it's likely just a temporary correction in the upward trend. Investors should exercise patience and continue to be bullish on the stock.

  • Medium to long-term adjustment: If the decline breaks the previous trend and channel, it may require several months for adjustment. However, the stock may still be favorable in the medium to long term. Investors should closely monitor the situation, and those with the capability may engage in short-term trading, while general investors should hold their positions.

  • Change in trend: If the stock consistently hits new lows with a long-term downward trend, it may signify a change in trend. In such cases, investors should exit early to avoid losses.

Gist​

When determining the nature of stock adjustments, consider the magnitude of the decline. Stocks with long-term prospects typically experience smaller declines from their peak prices and may exhibit rebound actions. Conversely, weak stocks may see significant declines with weak rebounds, possibly indicating a change in long-term trend. Therefore, investors should exit early for stocks with significant declines and weak rebound strength.

In summary, using weekly charts to judge the stock price trend is more reliable, as daily fluctuations are more susceptible to short-term influences. Stocks undergoing medium-term adjustments often display technical patterns such as sideways consolidation or ascending triangles, while those experiencing a change in trend may exhibit downtrend patterns.

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