Learning Xi Introduction to the Theory and Methods of Technical Analysis, 5. Tangent Theory

Mondo Education Updated on 2024-01-29

This column will be divided into three sections:Introduction to technical analysis, classification of technical analysis methods and related theories, main technical indicators

In the article "Learning Xi |Introduction to the Theory and Methods of Technical Analysis 1: Introduction to Technical Analysis" introduces five contents: Introduction to Technical Analysis: the meaning of technical analysis, the three basic assumptions of technical analysis, the elements of technical analysis, the advantages and disadvantages of technical analysis, and the precautions in the application of technical analysis.

In the article "Learning Xi |Introduction to the Theory and Methods of Technical Analysis 2: Classification introduces the classification of technical analysis methods, which are mainly divided into five categories: indicators, tangents, patterns, **, and waves.

In the article "Learning Xi |Introduction to the Theory and Methods of Technical Analysis 3: The Dow Theory introduces the principles and limitations of the Dow Theory.

In the article "Learning Xi |Introduction to the Theory and Methods of Technical Analysis No. 4: "Theory" introduces the content of the four parts of the theory (a) The main forms of the theory;(b) ** Combined applications;(c) Typical ** combination analysis;(d) ** Precautions to be taken when applying in combination.

There are 5 main theories of technical analysis: Dow Theory, ** Theory, etcTangent theory, Morphological Theory, Wave Theory. Let's learn Xi in this issueTangent theoryThis section is divided into four parts:

a) Trend lines and envelopes.

b) Support and pressure lines.

c) Confirmation of support lines and pressure.

d) Dividing line.

Let's take a look at the details:

1. Definition: Tangent theory is a theory that draws some straight lines in the chart drawn by the data of the first class according to certain methods and principles, and then analyzes the future trend of the first line according to the situation of these straight lines, and these straight lines are called tangent lines.

2. The role of the tangent line: it mainly plays the role of support and pressure, and the backward extension position of the support line and the pressure line plays a role in supporting and stressing the trend.

3. Types of tangent lines: trend lines, orbital lines, split lines, percentage lines, etc.

a) Trend lines and envelopes.

1. Definition of trend line: The trend of change has a direction, so this trend can be represented by a straight line on the chart of the stock price trend, which is called a trend line.

2. How to draw a trend line: connect the ** fluctuation high or low point for a period of time to draw a trend line.

1) Ascending trend line: In an uptrend, connect two or more adjacent lows into a straight line and extend it to get an ascending trend line, and the ascending trend line plays a supporting role.

2) Downward trend line: In a downward trend, connect two or more adjacent highs into a straight line and extend it to get a downward trend line, and the downward trend line plays the role of a pressure line.

3. The role of the trend line:

It has a restraining effect on the later changes, so that the trend line is always kept above (rising trend line) or below (falling trend line), playing the role of support and pressure.

After the trend line is broken, a trend reversal signal is issued, and the more important and effective the trend line is broken, the stronger the trend reversal signal. After the trend line is breached, the original support and pressure effects will be converted into each other.

4. Track line:

1) Definition: also known as the channel line or pipeline line, is a way to draw the trend line, after drawing a trend line, and then connect the two adjacent peaks above the upward trend line into a straight line, and extend out, it constitutes an upward trajectory line;A descending track is formed by connecting two adjacent valleys below a certain downward trend line into a straight line and extending out.

2) Note: The more times the orbital line is touched, the longer it lasts, and the higher its accuracy.

5. Breakthrough of the track line:

An upward breakout of the ascending track line is not the beginning of a trend reversal, but the beginning of a trend acceleration, and a downward breakout of the ascending track line is a signal of a trend reversal.

A downward breakout of the descending track line is not the beginning of a trend reversal, but the beginning of a trend acceleration, and an upward breakout of the descending track line is a signal of a trend reversal.

b) Support and pressure lines.

1. Support line:It means that when the stock price reaches a certain price, there will be an increase in buying orders and a decrease in selling orders, so that the stock price will stop and may even recover.

2. Pressure line:It means that when the stock price reaches a certain price, there will be an increase in selling orders and a decrease in buying orders, and the stock price will stop or even fall.

3. The role of the support line and the pressure lineIt is to prevent or temporarily prevent the stock price from continuing to move in one direction, support and pressure are not absolute, once broken, support and pressure will be converted.

c) Confirmation of support lines and pressure.

There are 3 aspects to the impact of the support or resistance line on the current stock price.

1. The length of time the stock price stays in this area.

2. The volume of stock prices in this area.

3. The time when the support area and the pressure area occur are far away from the current time.

Obviously, the longer the stock price stays, the greater the accompanying volume, and the closer it is to the present, the greater the impact of this support or pressure zone on the current and vice versa.

d) Dividing line.

1. Dividing lineOne is based on 0The points calculated by the principle of 618** segmentation ratio, these points show strong support and pressure in the process of rising and **. It is calculated based on the increase or ** of the magnitude of 0618 and its ** ratio to determine support and pressure levels.

2. A number of special numbers for the dividing line

3. Dividing line drawing method

The above are the five theories of technical analysisCutLine Theory

Content**: Industrial **;The market is risky, investment needs to be cautious, this article is only a personal opinion, not as investment advice, past performance does not represent future performance, investors need to make judgments according to their own circumstances, according to the operation at their own risk.

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