The golden section line is a tangent drawing method using the golden section ratio. After the market has turned, whether it is stopping falling and turning up or stopping up and turning down, it is based on the rise and fall between important highs and lows in recent trends As the basis of measurement, the original rise and fall are divided into 5 golden points according to 0.236, 0.382, 0.5, 0.618, and 0.809. The trend of the stock price after the reversal may encounter temporary resistance or support at these golden points. Based on this, we calculated 0.236, 0.382, 0.809 and so on. Among them, the most classic numbers used in the golden section line are 0.382 and 0.618, which can easily generate support and pressure.
Golden section line drawing method and usage skills
Take points reasonably and correctly:
Low point: the lowest bar after an obvious rapid swing, and the lowest price of the physical part of the bar is taken as the starting point of the golden section line.
High point: This time the highest K line of the apparent rapid swing, take the highest price of the physical part of the K line as the end of the golden section line.
Use the golden section tool (the line drawing tool generally available in stock software) to automatically generate the golden section line (0.191 line, 0.382 line, 0.5 line, 0.618 line) from the starting point to the end point.
The key points of the golden section line drawing method:
- It is best to have an obvious rapid swing. If the swing is slow or the falling swing is small, the reference value of the drawn golden section line is not large;
- The starting point and ending point should preferably be the low or high point of the K physical part, rather than the lowest and highest price of the K line.
- The starting point is at the front and the ending point is at the back. The dividing line between the starting point and the ending point has a higher reference value, and the other lines have little reference value (such as line 1.2, etc.)
- The reference value of a certain K-line space is high. The farther from the starting point (horizontal distance), the lower the reference value.
- The golden ratio line is generally used for bear market rebounds.
Key points of using golden section line:
When will the golden ratio line be drawn? I think this is a problem that many stockists are concerned about. It does not mean that once there is a significant low or Zhongyang stops falling K-line, it starts to draw, but uses the trend to stop falling and rebound as a reference (in general, the stock price is back to the five-day moving average. And stop falling and maintain stability as a trend rebound feature), and then take the starting point and ending point. If you are unsure whether it is already a low point, wait for the stock price to rebound significantly before drawing the line.
The golden section line is the pressure level for the stock price rebound. The most frequently referenced operation by the dealer is the 0.382 line, the 0.5 line and the 0.618 line. Under normal circumstances, when the stock runs to the 0.382 line (pressure level), it will begin a phased callback. The depth of the callback is generally the 0.191 line (support level), and then rebound. When the stock price rebounds and runs to the 0.5 line (pressure level), the stock price has a phased callback. The depth of the callback is generally at the 0.382 line (support level), or it may continue to rebound. When the stock price rebounds to the 0.618 line (pressure level), the stock price has a phased callback, and the depth of the callback is generally 0.5 line (support level). Then or continue to rebound, this is the standard golden ratio usage.
Diversified development of the golden section line: Nowadays, the stock price movement has rarely seen the standard golden section pressure level or support level. Because of this technology, not only retail investors, but also bookmakers, so bookmakers often use golden section lines to perform various operations. Disk movements, such as luring more or emptying or unwinding and so on.
The most frequently seen trading methods of golden section line dealers:
- The 0.5 line cannot form an effective pressure or support level, and the 0.191 line cannot form an effective support level;
- When rebounding, the stock price sometimes starts to pull back before it rises to the 0.382 or 0.618 line, or it pulls back only after it rises above the top. It may also be a false rise and fall all the way.
- In the bull market, if it is just a deep V wash, the drawn golden section line has little reference value. If you sell with reference to the pressure of the dividing line, you may miss the short-term bull market.