Today I learned a skill: how to determine whether the market is reversing or rebounding after a sharp drop. Capital flow can actually be used to accurately determine this.
After the rebound from the June 22nd plunge, positive inflows far outweighed negative inflows, with only a few green bars and one red bar.
After the rebound from the July 26th plunge, positive inflows far outweighed negative inflows, with eight red bars and four green bars. The red bars were also longer than the green bars.
Thus, we can conclude that the market after June 22nd is a reversal, and the next wave will be an uptrend. Don't take profits too early, or you'll miss the next major uptrend.
However, the market after June 26th was a rebound because funds were constantly flowing out, and buying power was weakening, eventually failing to sustain the decline.
Learning this together will help us determine whether the market after today's plunge will be a minor rebound or the beginning of a major uptrend in the coming week.
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