Wave theory holds that the period of stock price changes consists of eight waves, including five rising waves and three adjustment waves, which can be summarized as "eight-wave period" in one word. After the above eight waves are finished, one cycle is completed, and the trend enters the next "eight-wave cycle". The length of time will not change the shape of the wave. The waveform can be lengthened or shortened, but its basic shape remains unchanged, as shown in the following figure:
Among the eight waves, 1 to the fifth wave is the rising wave, in which 1, the third and fifth waves are the pushing waves, and the second and fourth waves are the adjustment waves in the rising waves. Each wave is divided into several medium waves, and each medium wave is divided into many wavelets. A complete stock market cycle is subdivided into 144 small waves, as shown in the following figure:
According to wave theory, eight kinds of waves have different performances and characteristics.
Wave 1: It usually appears at the end of a long-term decline or consolidation, with a slight increase in trading volume and stock price, but it is usually the first part of creating a bottom shape. Generally, it is the smallest increase among the five waves.
The second wave: The second wave is a downward wave. Because some market participants think that the bear market is not over yet, the adjustment range is one.
Generally, it is quite large and often covers most or all of the rising space of 1 wave. Generally, in the second wave, the price is no longer low.
After the price fell, it rebounded quickly, and there were turning forms such as head, shoulder and bottom, and W bottom.
The third wave: The third wave is often the largest and most explosive wave, and its duration and amplitude are often the longest. Market confidence began to recover, trading volume rose sharply, and stock prices often showed obvious breakthrough signals, such as gap gap. Breaking the high point of 1 wave is the strongest buying signal. Due to the fierce rise of the third wave, "delay" often occurs.
Long wave phenomenon. Judging from the wave ratio, the third wave is usually 1 1.6 18 times, or even 2.6 18 times or other mysterious number combinations, and must not be shorter than 1 wave, otherwise it will not constitute the third wave.
The fourth wave: the shape is complex, which often shows signs of weak market succession, but usually the bottom of the fourth wave will not be lower than the top of 1 wave. The structure of the fourth wave is different from that of the second wave, for example, the second wave appears in a simple form, while the fourth wave appears in a complex form.
The fifth wave: the increase of the fifth wave is usually less than that of the third wave, and there will be a fault that its high point is lower than that of the third wave; In The 5th Wave, the second-and third-class stocks are usually the dominant forces in the market, and their gains are often greater than those of www.southmoney.com in the first-class stocks (blue-chip stocks and large-cap stocks). The market sentiment during this period was quite optimistic.
A wave: Most investors think that it is only a temporary retracement of the rising market, and they will also absorb stocks on dips. In fact, technical indicators or trading volume have deviated from the signal, and the stock market has faced a reversal.
Wave B: The volume of wave B is small, and it is generally a long escape line. However, because it is a rising market, it is very
It is easy for investors to mistakenly think that it is an upward trend in another band, forming a "long trap". For B waves, you can refer to technical indicators to judge.
Whether the market is weakening.
C-wave: a dangerous, deep and lasting downward wave. C wave started from panic selling, and
There has been a general decline.