The importance of crosshairs

If the market was at an important turning point, or at the late stage of a bull or bear market. Or other technical signals had issued warning messages at that time, then the approximate crosshairs appearing at this time should be regarded as a crosshair. The theoretical basis of this approach is that because the crosshairs may constitute an important warning signal, we would rather misrecognize it than miss it; encountering a false warning signal is always much stronger than passing a real danger signal . Because the crosshairs contain many technical meanings, ignoring a crosshair may lead to danger.

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Crosshairs at the top of the market

The reason why the cross hair is extremely valuable is because it has an extraordinary ability to reveal the top of the market. In an uptrend, this is especially noteworthy if a long white candle line appears in front of it, followed by a cross. Why does the crosshair appear negative in the upward trend? This is because the crosshair represents the market’s hesitation. In the upward trend, if the buyer is hesitant, does not know the direction of the market, or makes a decisive decision, then the current upward trend cannot be maintained. Only under the condition that the buyer’s position is firm, the rising market can be strongly supported. After the market has experienced a long-term rise, or when the market is overbought, if a cross appears (the word “hesitate” is written on this candle line), it means that the buyer The scaffolding is about to collapse.

On the other hand, although the crosshair is quite effective in triggering a top reversal in the market, according to our experience, in the downward trend, the crosshair often loses its potential to play a reversal role. The reason for this may be this: The Shiyu Line reflects that the buyer and seller are in a relatively balanced state of strength. Because market participants hold the attitude of riding a wall, the market often falls due to its own gravity. Therefore, when the cross appears, in the upward trend, the market may reverse downward, while in the downward trend, the market may continue to fall. For the above reasons, the crosshairs need more proof when they form the bottom reversal signal than as the top reversal signal.

Long-legged crosshairs and rickshaw drivers: The long-legged crosshairs at the top of the market are a particularly important type of crosshairs. As shown in the figure below, such crosshairs have long upper and lower shadows, clearly showing the psychological state of uncertainty in the market. On the trading day that formed the long-legged crosshairs, the market first pushed up violently, then fell sharply (or vice versa), and finally when the market closed, its closing price was at the same level or very close . If the opening and closing prices of the day are exactly at the midpoint of the full-day price range, then this candle line is called a rickshaw driver (line). If a non-crossed candle line has a long upper shadow line, or has a long lower shadow line, and its entity is small, this candle line is called a wind and wave line.
 
If there is a group of wind and waves, it also constitutes a reversal pattern. For Japanese analysts, the formation of a very long upper shadow or a very long lower shadow—borrowing their words to describe it—indicates that the market has “lost a sense of direction”.
The more conservative the trading style we adopt, the more important it is to wait patiently for the verification signal of a trend reversal. How long do you have to wait? This has to be weighed in terms of risk and compensation. If we choose a more conservative trading style and prefer to wait for the verification signal of a trend reversal, then it may indeed take less risk; but on the other hand, the compensation we get from the transaction may also be reduced. By the time the trend reversal signal is confirmed, the profitable space may have narrowed.
A crosshair that appears after a long white candle line: A crosshair appears after a long white candle line. Especially when the crosshair occurs after a long-term upward trend, it often constitutes a warning signal that the top is coming.

The more conservative the trading style we adopt, the more important it is to wait patiently for the verification signal of a trend reversal. How long do you have to wait? This has to be weighed in terms of risk and compensation. If we choose a more conservative trading style and prefer to wait for the verification signal of a trend reversal, then it may indeed take less risk; but on the other hand, the compensation we get from the transaction may also be reduced. By the time the trend reversal signal is confirmed, the profitable space may have narrowed.
A crosshair that appears after a long white candle line: A crosshair appears after a long white candle line. Especially when the crosshair occurs after a long-term upward trend, it often constitutes a warning signal that the top is coming.

Tombstone crosshairs: There is also a very unique cross candle line, called tombstone crosshairs (also known as spiritual crosshairs). On a candle line, when the opening and closing prices are at the lowest point of the day, a tombstone cross is formed. Although we can sometimes find this kind of candle line at the bottom of the market, the most prominent advantage of this type of pattern is that it shows the top of the market. Judging from the shape of the tombstone crosshairs, its name is quite appropriate. We once pointed out. Many ten words of Japanese technical analysis are based on similar military terminology. In this sense, the tombstone crosshairs exactly mark the long or short graves that were killed in the market to defend their positions.

The tombstone crosshairs behind the rising market have a weak meaning, and the reason is well understood. On this candle line, the market opened at the lowest point of the day. Later, the market began to surge (in the process, the market is best to hit a new high in the current upward trend). But the good times didn’t last long, the price plummeted and returned to the lowest point of the day, the trouble of the bulls came. The longer the upper shadow line of this pattern, the higher the price level, and the weaker the technical significance of this tombstone crosshair.
Tombstone crosshairs are quite similar to meteor forms. The tombstone crosshairs that occurred at the top of the market are actually a special case of meteor formation. The meteor candle line has smaller entities, while the tombstone crosshairs—as a crosshair—does not even have entities, and the tombstone crosshairs are weaker than the meteor form. Crosshairs forming support and barrier levels: Crosshairs can sometimes be transformed into a support zone or a blocking zone. This is especially true when it appears at the top or bottom of an important market. The above is a detailed explanation of the magical effect of the K-line price.