The whole cycle comes from the simple diagram below 👇
I used PLTR's weekly chart (which used 30MA, 40MA, 10MA) for a simple interpretation:
The area framed in yellow on the chart is its third stage. At this stage, stocks have gone through the process of switching from strong players (buyers who have already made a lot of profits) to weak hands (new buyers who have just entered). It can be seen that the area with a significant increase in trading volume is an area with a large number of changes;
The area framed in red in the chart is its fourth stage. At this stage, the strong players have basically left the stock market in the third stage, and the stock lost big purchases. As the stock price continues to interact with people's mentality, the price continues to decline until people's psychological defenses collapse and they sell the last stock in their hands;
The area framed in white on the chart is its first stage. At this point, weak players have almost sold their stocks in the previous fourth stage with huge losses. At this stage, stocks were sorted out at the bottom for a long time, and at the same time, strong players (big buyers) slowly began to establish huge positions. The overall trading volume is low, and the time period may be very long;
The white arrow in the chart shows that the stock broke out of the first stage and moved upward. At the same time, along with the huge trading volume (the trading volume framed in white in the chart), a large number of purchases entered at this time, rapidly raised the stock price, and the stock quickly began the second phase;
The area framed in sky blue on the chart is the first base of the second phase. Here, stocks have already risen sharply compared to the stock price of the first phase, and are slowly starting to digest...