HOW DO YOU KNOW WHEN THE MARKET BOTTOM IS IN?

in #markets6 years ago (edited)

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A short guide on how to asses if the market has hit bottom:

  1. Capitulation has occurred. This means the asset has retraced significantly, sometimes up to 95%, and investors give up previous gains in any security or market by selling their positions during periods of decline. This is seen as surrender, exiting and taking a loss.

  2. A V-shape at the bottom with a typical 70-100% bounce back up. Most investors miss this move because it can be a fast, volatile and typically an unpredictable market move.

capitulation_example-5bfd6f9d46e0fb00517f349e.png

  1. Retrace up to 50% of the bounce up and consolidate there. This is a slower process and can be seen as market movement sideways for months, sometimes years.

  2. A sustained breakout outside and above of the main diagonal descending resistance trend line which has dictating the bear market.

One does not need to by the market bottom to profit. In fact many seasoned investors wait for a buy signal, confirmation, after a measured move up from the supply zone.

Happy trading to all! Horses for Everyone!

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