Reward 1000 Tiger-coinsHello 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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Event Duration
Now till 31st Dec.
Comments
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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