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How to judge the diffusive horn pattern ?


As an investment trader, you must understand the use of chart technology analysis to determine the position of market transactions.


Now let's talk about a common pattern in chart technical analysis, which is the diffuse speaker pattern. Diffusion horn patterns are different from trend patterns and horizontal patterns. 

Diffusion horn patterns are more difficult to judge than trend patterns and horizontal patterns, and often cause losses to investment traders. So, how do investment traders judge the spreading horn pattern and make favorable investment transactions?

S&P500 Index

The price trend of the diffusive horn pattern. 


When the price rises over some time, then the price falls, and falls below the recent low, then rises, and rises through the last high. It keeps expanding in two directions. If we connect the high point and the low point with straight lines, respectively, we can show a horn shape, so it is called a diffuse horn shape. 

Because of this, some investors who are accustomed to doing trend trading often suffer losses from this capricious chart pattern. When a buy transaction is made, the price drops rapidly, and when a sell transaction is made, it quickly rises, and so on.

Regardless of the meaning of the diffuse horn pattern tilting up or down, the diffuse horn pattern most often appears at the end of the upward trend, which means the end of the bull market, often a precursor to a sharp price drop. However, it can also appear at the end of the downtrend, which means the end of the short market and the price is about to rise.

In terms of trading volume, throughout the formation of the diffuse horn type, high and irregular trading volume was maintained, and it did not decrease with the development of the pattern.

S&P500 Index


How do chart technical analysts respond to diffuse horn patterns? 


First, the analyst can observe other technical indicators on the chart, such as the previous price trend, wave theory, technical indicators, etc., and cooperate with the chart pattern analysis to determine the possibility that the price trend at that time will evolve into a diffuse speaker pattern. 

Or, when the general trend of prices has been in progress for some time, the trend development has stopped, and small trends have begun to fluctuate, do not make investment transactions, wait for the formation of a diffuse speaker pattern, and show a clear price trend direction before investing transaction. 

Second, investment traders can cooperate with fundamental analysis when selecting assets or stocks. For example, stocks can analyze the company's financial status and operating model, to grasp the company's prospects and profitability, analyze the company's valuation and reasonable prices. 

When the analysis shows that the value of the company is undervalued, or that the company's profit is growing, and the stock price is in an upward trend or breaks the trend line, then the possibility of the price continuing to rise is relatively large.

To become a mature and stable investment trader, you must understand that there are always risks and uncertainties in the investment market.

Different analysis methods can increase the odds and confidence of investment transactions, help manage the risk of asset portfolios, and gradually achieve wealth appreciation. The goal.
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