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In market analysis, a price fall does not always mean a trend reversal. To identify a true trend change, we need to follow clear structural signals.
Let’s understand this through a typical case: in an uptrend, even though the price may experience multiple falls, as long as it does not disrupt the overall rising rhythm, these are just pullbacks rather than reversals. A true trend reversal occurs when we see a fundamental change in the price direction, presenting a sustained downward trend.
So, how can we distinguish between a pullback and a reversal? We can judge from the following three key structural perspectives:
1. Has the trend rhythm been broken?
During the pullback phase, the price continues to maintain the "higher highs and higher lows" pattern. Only when there is a situation of "lower highs and lower lows" can we preliminarily judge that the trend may begin to reverse.
2. Has the key structure been broken?
A pullback usually does not fall below previous lows or important support levels. When we observe that a key level has been broken and the overall structure has been damaged, it often signals the occurrence of a reversal.
3. Has the trend line shown a turning point?
During the pullback, the support role of the trend line remains effective. However, when the price clearly falls below the trend line and the movement begins to rearrange, it usually indicates that a reversal has started.
In summary, accurately identifying changes in market trends requires a comprehensive and in-depth analysis of price movements. We cannot determine that a trend has reversed based solely on a single price fall phenomenon. Only when we observe clear structural change signals can we more confidently judge a true trend reversal. This analytical method is applicable not only to financial markets but also to other fields that require trend judgment, helping us make more accurate decisions.