1. Confirmation Signals for Effective Support
1. Confirmation Signal for Trend Pullback: During the pullback process of an uptrend, if the bearish candlestick is significantly smaller than the previous bullish candlestick, especially when approaching a key support level with noticeably reduced volume, followed by a bullish engulfing pattern and price rebound, it can be determined as effective support.
2. Breakout Type: When the price forms a sideways consolidation pattern in the support area and subsequently breaks out with an increased long bullish candlestick after sufficient consolidation, it validates the effectiveness of the support.
3. False Breakout Validation Type: If the price tests the support level and does not form an effective breakdown, combined with a significant increase in volume during the rebound, it can confirm the effectiveness of the support.
2. Warning Signals for Support Failure
1. Warning Signal for Weak Rebound: If a strong bearish candlestick appears during a pullback in an uptrend, even if a technical rebound occurs near the support level, the rebound strength is obviously insufficient and the volume shrinks, indicating that the support may fail.
2. Confirmation of Breakout Pattern: If a consolidation platform formed in the support area ultimately breaks down with a significant long bearish candlestick, it usually triggers stop-loss orders, creating a situation of multiple liquidation, confirming the failure of support.
3. Trend Reversal Signal: When the price breaks through an important support level with increased volume, it often indicates a trend reversal, with the original support transforming into a new resistance level.
