The second top shorting method is a sister strategy to the second bottom long strategy. It refers to a price that has shown a continuous upward trend, where there has been an initial breakout above the upper Bollinger Band. However, not every upward trend that breaks the upper band is considered the first top in the second top shorting method. The condition that determines whether it is the first top is that the subsequent upward movement after a price pullback fails to break the previous high. The level that cannot be broken becomes the first top in the second top shorting method, and the subsequent upward movement after the price pullback is the second top. If the price falls below the middle band of the Bollinger Bands, we consider this a failure of the second top. If the price falls below the middle band and the rebound is capped by the middle band, we can use this as a basis to enter a short position.
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It can be observed that the contract price first peaked at 4420 points and once broke above the upper Bollinger Band, but why is it not considered the first top in the second top breakout shorting method we are discussing now? Because, as mentioned earlier, whether it is the first top is determined by whether the subsequent second top can break the previous high after the top is reached. When the price peaked at 4420 points, the subsequent pullback and attempt to retest could not break this previous high of 4420 points.
When the price falls below the middle band of the Bollinger Bands (at the circled point), and the rebound is capped by the middle band, we can use this as a basis to enter a short position, which is the 'second top shorting method'.