When the market explores the same high or low twice within two or several trading days adjacent to each other, a flat head pattern is formed. Such a pattern itself is a small-scale reversal signal. The candle line also has other candle chart indicators, which adds additional importance. For example, if the highest point of two candles in a cross pregnancy line is at the same high point, then these two candles form two candles Form, then the importance increases.
During the rise of the exchange rate, the selling pressure at a certain high level is very high. It may peak and fall when the exchange rate continues to fail after two consecutive upwards. Therefore, in operation, sufficient attention should be paid to such morphological features.
In the process of falling prices, the bears pushing down prices have gradually dried up. The buying orders under the market continue to appear. The seller’s power is resisted at the same price level, and prices are about to rise. The bears failed to strike downward for 2 consecutive days (or several days), and the camp was dispersed. Later, the bulls who pushed up the price took the initiative to form the bottom of the price run, and the market price may rise.
With a flat head pattern, we must prepare for the reversal of the original trend. When forming a flat head, the long positions held should be carefully considered. You can consider closing all positions and watching first, or you can temporarily close some positions to ensure certain profits. The key is to look at the trend of the third K-line (the one after the flat head pattern) to determine whether its reversal is true. If the price breaks through the flat head, it is easy to form an upward trend. When setting a stop loss, a certain price range can be set on the top of the flat head as a stop loss point.
When a flat bottom is formed, if you originally held an empty order, you may consider closing all the positions and watching, or temporarily closing the part, “the bag is safe.” Also look at the trend of the third K-line (the one with the flat bottom pattern), whether the center of gravity moves up or down to determine its reversal significance.
If the market outlook breaks through the lowest price of this pattern, it may mean that the downward range is opened. Therefore, this price has a positive significance for the establishment of stop loss.
The flat bottom (top) is a strong support (resistance) before it breaks. Once the price breaks down (upward), it will trigger a round of decline (upward), and it will also be converted into an important resistance (support) level in the future market. When judging the bottom of a flat head, you should refer to the important support level; when judging the top of a flat head, you should refer to the important pressure level. With the coordination of important supporting pressure levels, the application of flat bottoms and tops will improve the ability to judge the market. Don’t judge only a single K-line form, pay attention to the overall technical aspects to operate. Consider the current trend direction, and don’t fall into the trap of seeing details and not looking at the trend direction.