Identification and trading of convergent patterns

The convergence pattern is a K-line pattern that changes from a wide amplitude to a narrow amplitude. It is a process in which the power of the market game gradually changes from intense to moderate. Then, once the power is enlarged again, it is often easy to break through the inflection point and break out of a new market trend. , is a price trend pattern worth capturing.

01 Identification of Convergent Form

(1) Identify the convergent shape from the high point and low point of the band, the common ones are symmetrical triangle, wedge, rhombus, etc. Figure 1)

(2) Identify the convergent shape from the amplitude of the K-line, such as: Insidebar (harami), multiple harami, ORB Nr4, etc. As shown in the picture (2)

figure 2)

02Convergent transaction

We can imagine: when a small force slowly moves in a certain direction, as long as a slightly larger new force is injected, the original force will easily develop with the direction of the new force.

When the convergence pattern shrinks to a very small level, the long-short power is just in an evenly balanced state. At this time, once the power increases slightly, it is easy to change this balanced state, and it is very likely that there will be a turning point and a new trend. Quotes.

The best time for us to enter the market is in the instant time window when this state of evenness between the long and the short is broken, that is, the moment when the small force starts to become bigger. As shown in (3) and (4)

image 3)

Figure 4)

For convergent trading, we'd better consider its trading background, whether it's in a trend, whether it's at a key position, whether it's a continuation or a reversal, and it's better to combine the trading background to trade the convergent shape.