In the field of investment, recognizing the bottom and the top is extremely important, as they determine the investor's profit and risk. The bottom is usually the safest buying point, while the top is the right time to exit an investment position.
To identify the bottom:
1. The bottom usually does not appear suddenly but is the result of a sharp decline beforehand. It is often formed after a severe drop, causing market sentiment to collapse.
2. After a series of red candles, the appearance of a strong green candle indicates the involvement of large capital flows.
3. The bottom often forms at strong support areas, such as long-term accumulation zones or important psychological thresholds.
To identify the peak:
1. The top is often reached quickly, like a "sprint," with many long green candles appearing on the chart.
2. A sudden reversal often occurs after a series of continuous green candles, serving as a warning signal of weakening upward trends.
3. The top often forms at strong resistance areas, where supply pressure rises strongly.
Correctly identifying the bottom and top not only helps investors avoid risks but also creates opportunities to enter and exit the market wisely. This requires careful observation and a deep understanding of the market to make accurate investment decisions.
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