1. What is a K-chart?
K-chart originated in the Tokugawa shogunate Period of Japan. It was a simple diagram drawn by Japanese rice traders in order to conveniently record the price and market changes of the day’s trading, from which the general situation of the day’s trading in the rice market could be interpreted. Later, this delicate and unique marking method was introduced into the stock market and futures market.
At present, this chart analysis method is mainly popular in Asia, especially in China and Southeast Asia. Because of its appearance similar to the candle, the K-chart is generally called the candle chart, and these candles have black and white, so it is also called the Yin and Yang line chart.
A K-chart contains a lot of important information about the time period, including the opening price and closing price, as well as the highest price and the lowest price. Several K-charts combine to form some special regions or forms. However, different forms contain different market information, and investors can find out some rules from them for reference of investment decisions.
A K chart contains four basic elements: the opening price, the high price, the low price and the closing price.
When drawing a K-chart, we first determine the highest price and lowest price on that day or within a certain week, and connect the two into a straight line. Then we find out the opening price and closing price of that day or within a certain week, and form a rectangle with two short vertical lines, the highest and lowest.
If the closing price is higher than the opening price, the rectangle is a hollow entity called the positive line.
If the closing price is lower than the opening price, the rectangle is a black entity called the negative line.
Domestic stock and futures markets usually use red for positive lines and green for negative lines, while the opposite is true in Europe and the US.
The line segment between the highest price and the entity is called the upper shadow, and the line segment between the lowest price and the entity is called the lower shadow.
The details are shown in the following figure: As shown in the figure, the positive line is marked in the figure, and its four elements can clearly reflect the important information of the market trading behavior during this period, which can provide reference for investors to make decisions.
The figure shows the typical structure of the negative line. From the K chart, it can be seen that the market fluctuated greatly in this period of time, and the market began to stabilize and rebound after the sharp decline. A long downward line means that the market has some buying at this position, and the market will stabilize and consolidate in the future.
So a typical K chart can help us better judge the general direction of the market in the afternoon.
According to different time periods, K-line can be divided into long period daily K-line, weekly K-line, monthly K-line, and annual K-line.
Short cycle 4 hours K line, 1 hour K line, 30 minutes K line, and 15 minutes K line, etc.
These K lines of different periods will be used in different situations. For example, the time span of weekly K and monthly K lines is long, which is usually used to study and judge the medium and long-term market trend, and can basically establish the general future trend of the trading variety.
The short-cycle K line, such as the 4-hour K line and the 30-minute K line, is usually a good reference tool for intra-day short-term trading, which can help investors better grasp the short-term market trend and gain intra-day profit space.
When we analyze a variety, we usually start from the long cycle K-line, such as the weekly line and the monthly line, and then look at the daily line and 4-hour chart after establishing the trend direction of the market in the big cycle. In terms of the direction of operation, it should be consistent with the big cycle. In the short cycle, the relative high (or low) will enter the market, and basically the probability of stop profit is large.
According to the fluctuation range of opening and closing prices, line K can be divided into large Yin and large Yang, medium Yin and medium Yang, small Yin and small Yang, etc.
Among them, the fluctuation range of large Yin line and large Yang line is above 3.6%, the fluctuation range of medium Yin line and medium Yang line is generally between 1.6% and 3.5%, and the fluctuation range of small Yin line and small Yang line is generally below 1.5%.
Take Dayang Line as an example. When Dayang line appears, the opening price is close to the lowest price of the whole day, and then the price rises all the way to the highest price, indicating that the market buyers are enthusiastic and the rise has not been finished, as shown in the figure below:
The above chart shows the daily gold chart. From a technical point of view only, gold has formed a W double bottom structure near 1200 with a large positive line, indicating that the market has strong momentum to go long and the rebound momentum will continue. Combined with the fundamental news, the sudden increase of the risk of the French election and the continuous geopolitical turmoil, the success rate of going long greatly increases.
Similarly, the large negative line appears when the price is relatively high, indicating that the market has strong momentum of short selling, and the probability of accelerated decline in the afternoon market is greater, which can be used as a good short entry point. However, if the large negative line and the large positive line are mainly affected by sudden news, once the investor sentiment is stable in the afternoon market, the possibility of market reversal is still greater, so it is not necessary to blindly follow the trend.
Also need to combine the fundamental news comprehensive study and judgment of the trading variety future trend.
1. Crosshair line Crosshair line is a form in which the opening price and closing price basically coincide or have very little difference, while the upper and lower price lines are long. This form can reflect the serious divergence between the two sides of the market on the price, and the two sides of the market are competing fiercely.
Therefore, investors need to pay extra attention to the specific chart as follows: in the above figure, the shape of the cross star appears at the top of the market, reflecting the lack of momentum for the market to continue to move up, and the two sides of the fierce competition, followed by a large negative line, showing the dominance of the short, then the market continued to fall.
The general shape of the cross star appears near the important support or resistance level. Once the market reverses, the probability of the continuation of the reversal of the basic establishment of the future market is very large. Of course, it does not exclude the occurrence of false reversal signals.
2. Hammerhead line The hammerhead line is shaped like a hammer, which occurs when the market trading price falls after the opening, then stabilizes and rises again on the same day, closing higher than or close to the opening price.
This form generally appears at the bottom of the market, the market continues the previous downward trend, but after the market price to a certain extent, part of the buying began to appear, the price bottomed out and rebounded, the form also indicates that the lower support is strong, once the reversal is formed, the probability of the future market continues to rebound is very high.
As shown in the following figure: As shown in the figure, the market fell after the continuation of the previous decline, then the buying appeared, the market reversed, the rebound market continued, short-term more.
3. Inverted hammer line is similar to the inverted hammer line, but it appears at the top of the price, that is, the market trading price rises significantly after the opening and then falls. At the close of the market, it shows a small negative line or a small positive line with a shadow line, indicating that the market price is under great pressure and unable to rise.
As shown in the following figure: the above inverted vertical line shape is very typical, the market prices rise and fall, showing the lack of momentum to do long, coupled with a big Yin line in the afternoon, the reverse shape appears, the afternoon market from up to down.
The market information provided by a K line can not help us 100% to determine the market price and future market trend, but the two K lines combined together, the correct rate of this research will be greatly increased, here we will introduce several special two K line combination form.
1. Gestational line morphology The formation principle of gestational line morphology is very simple. When the price rises or falls all the way, the momentum of doing long or short is exhausted, and the main force makes a final push to push the price to a new high or new low.
The combination of these two K-lines can be called the gestational line shape, as shown in the figure below: the appearance of the gestational line shape does not fully confirm that the future market will reverse, but only indicates that the market continues to lack the previous momentum, which still needs to be judged by combining the future market trend.
2. Penetration form The penetration form is very similar to the gestation line form, the difference is that the second K-line entity is more than 50% of the previous K-line, and the appearance of this form means a higher possibility of market reversal, which is usually used as an important sign to judge whether the market bottom has been formed, as shown in the figure:
As shown in the figure above, two piercings reversed successfully, while one piercings reversed only briefly and did not change the general trend of decline. Therefore, the piercings can help us judge whether the market will reverse. However, sometimes the signals given by the market are not 100% correct, and it is still necessary to consider other influencing factors comprehensively to judge.
3. Engulfing form Engulfing form is that the color of the two K lines before and after must be opposite, and the entity part of the latter K line must contain the entity of the former K line, that is to say, the opening or closing price of the latter K line should be higher or lower than the price of the previous K line.
The engulfing pattern is the ultimate enhanced version of the gestational line pattern and the piercing pattern, which is more likely to have an afternoon reversal, and is an important reference for us to judge whether the market has a reversal. Of course, not all the engulfing patterns can be effective. We can comprehensively judge the afternoon trend of the market by combining the trend line, moving average, MACD and other technical indicators reversal signals, as shown in the figure below:
In the figure above, when the engulfing pattern is combined with the golden fork and the dead fork of MACD, the possibility of reversal in the afternoon market is greatly increased. There are strong and weak engulfing patterns. We need to analyze the engulfing pattern based on the specific market performance, but cannot make a generalization.
Three, three K line combination of the common form of technical analysis, a K line or two K line to provide investors with not a lot of information, but also need other auxiliary tools to support the judgment, otherwise it is easy to fall into the dogmatic misunderstanding, at this time the three K line combination can be a good help us analyze the subsequent performance of the market,
Here we briefly introduce several typical K – line combinations.
1, twilight star twilight star form appears at the top of the price, is a form of judging the top reversal, usually composed of a large Yang line and a large Yin line, and the cross line, the second cross star line and the first large Yang line have a certain price jump, when the cross star line means the price of the top, the third big Yin line confirmed the occurrence of the top process,
Completes the Twilight star form of this three-line form.
As shown below:
In the figure above, the twilight star appears on the right shoulder of M head, and the cross star K line does not reach a new high, which means that the top will appear. Combined with the formation of the dead cross of MACD, the possibility of the reversal of the market after K line breaks the M head and neck line is very large, and then the dead cross of the moving average system again proves that the market will reverse, and the trend of long-term decline in the future market.
To verify the effectiveness of the twilight star shape reversal, of course, the more technical evidence we have in the analysis, the higher the probability of success.
2, star shape star shape and evening star on the contrary, appear at the bottom of the price, meaning that the afternoon will end the previous decline.
In the opening star form, there is a long Yin line followed by a small entity, and a downward jump is formed between the two entities. The third K line is a large Yang line, which is obviously pushed up to the entity of the first K line, indicating that the bulls have redominated the direction of the market.
As shown in the following figure: From the above figure, we can see that the Qixing form appears at the position of the bottom three, and the MACD forms a gold cross. The third Dayang line of Qixing breaks the resistance level of the trend line of the wedge structure, and there is a high probability of rebound in the afternoon market. Then the market rebounds all the way to the starting point of the last cycle of adjustment, which means that the Qixing form reverses successfully.
Summary: The above is the small edition for you to organize: what is the K line graph?
What are the common forms of K diagram?
What are some special K diagrams?
We should carefully consider reading, can learn to apply, as much as possible in the actual combat more money.
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