TA Education 2｜How to Spot 2 Common Bearish Patterns?
Hello everyone! Today, we’ll be learning the second lesson of the TA Challenge, focusing on identifying two types of bear market patterns and providing relevant stock examples. You can click here to access yesterday’s lesson: 🎁TA Education｜Understand Market Signals! How to Spot $MSFT & $TSLA's Uptrend? and future lessons will continue to be published on the Tiger Chat account!
Healthy Downtrend
Key Characteristics of a Healthy Downtrend:
Price forms lower lows and lower highs: Each bounce is weaker than the last, confirming sellers are in control.
Volume expands on downswings: Red volume bars increase as selling pressure intensifies.
Volume contracts on relief rallies: Temporary upward moves happen on weak volume, showing buyers lack strength.
Essentially the opposite of a healthy uptrend: Momentum flows downward, supported by stronger selling participation.
Example: $Meta Platforms, Inc.(META)$, August to September 2023 During this period, META exhibited a textbook downtrend. Prices continued to create lower highs and lower lows, while volume consistently surged during sell-offs and faded during small rebounds. This pattern confirmed strong bearish momentum and a sustained seller-driven trend.
False Breakout (Low Volume)
Key Characteristics of a False Breakout:
Price breaks above resistance but volume is weak: The move looks real at first, but lacks the participation needed to sustain it.
Often just “pokes” above the level, then quickly reverses: Price cannot stay above resistance and slips back inside the range.
Signals a lack of conviction: Buyers are not strong enough to support the breakout.
Analogy: Like trying to push open a heavy door, but no one is helping from behind.
For example: $CME Bitcoin - main 2512(BTCmain)$ , March 3–23 During this period, Bitcoin briefly pushed above resistance, but volume stayed weak. The breakout failed to gain traction, and the price quickly fell back below the level—classic signs of a false breakout caused by insufficient buying pressure.
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Key Characteristics of a Healthy Downtrend:
Price forms lower lows and lower highs: Each bounce is weaker than the last, confirming sellers are in control.
Volume expands on downswings: Red volume bars increase as selling pressure intensifies.
Volume contracts on relief rallies: Temporary upward moves happen on weak volume, showing buyers lack strength.
Essentially the opposite of a healthy uptrend: Momentum flows downward, supported by stronger selling participation.
Neckline: support line connecting the lows of the two shoulders
Trigger: Break and close below neckline
Target: Height of head to neckline subtracted from breakdown point
Volume clue: Usually expands on breakdown, weaker on right shoulder
Double Top (“M” shape)Two roughly equal highs with a trough in between
Neckline = support at the trough low
Confirmation: Close below neckline
Target: Height from peaks to neckline projected down
Highest-Probability Bearish Setups (in order)Head & Shoulders at major resistance with volume confirmation + RSI divergence
Evening Star at resistance on high volume
Double Top with neckline break on expanding volume
Bearish Engulfing on weekly chart at all-time high zone
Rising Wedge breakdown in overbought conditions
In November, there were Bearish engulfing patterns for Nvidia where a large red candlestick completely engulfed the body of a smaller green candlestick. This was visible on a few trading days, notably following positive earnings announcement, signaling that sellers were overpowering buyers despite the good news.
Throughout November, Nvidia's price consistently traded below its shorter term moving averages (like the 20 day EMA), with a bearish crossover (where a shorter term average crosses below a longer term one) confirming the trend shift.
Consistent with a trend reversal, Nvidia significant price drops in November were accompanied by higher than average trading volume. This signaled strong selling pressure, rather than a simple low volume pullback.
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價格形成較低的低點和較低的高點：每次反彈都比上一次弱，證實賣家處於控制之中。
成交量在下跌時擴大：隨着拋售壓力加劇，紅色成交量柱增加。
緩解反彈的成交量合約：成交量疲軟時會出現暫時的上漲，表明買家缺乏實力。
本質上與健康上升趨勢相反：在更強的拋售參與的支撐下，動能向下流動。
其实，不管市场是牛还是熊，读懂成交量和价格的互动，远比追热点重要。趋势读懂了，交易才会有底气。
假突破的概念对于避免陷阱同样重要。如果成交量没有跟上，价格突破阻力位就毫无意义。就像3月3日至23日的比特币走势一样，突破起初看起来很有希望，但缺乏真正的购买压力使得逆转几乎不可避免。我学会了在相信任何突破信号之前总是检查成交量。
总体而言，今天的课程强调了在判断趋势强度时结合价格行为+成交量是多么重要。无论是发现干净的下跌趋势还是识别虚假的突破，了解市场的“参与”可以帮助我避免追逐错误的走势，并提高我阅读图表的信心。
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