Analysis of Stock Accumulation or Distribution Zones

 Investors should approach dense trading zone in a comprehensive manner. Investors who constantly feel pressure in dense trading zones tend to view this area statically, which is a misconception. In reality, the dense trading zone is a dynamic indicator.

This is because the market's consistently high turnover rate is constantly resolving the dense trading zone. After many people are trapped, they don't necessarily hold on and may sell or switch stocks. The dense trading zone left on the candlestick chart often becomes just a historical chart, and the longer the time, the higher the turnover rate, the smaller the effectiveness of the dense trading zone.

Whether it's the overall market or individual stocks, it's the same, especially for individual stocks. Some stocks have extremely high turnover rates, and the effect of the dense trading zone is very small. It is unlikely to create much pressure.

Therefore, investors should pay attention to the following points when analyzing dense trading zones:

Dynamic dense trading zones only have a certain effect on stock indices or stock prices in the short term. As time goes on and turnover increases, their effectiveness will diminish. The real impact may only be psychological.

When the overall market or individual stocks encounter resistance during a surge or decline, the term "dense trading zone" may be used to explain the phenomenon. However, what ultimately determines the market is not the so-called "dense zone." "There is no insurmountable mountain." If the main force wants to push up stocks, they will certainly consider the possible trapped positions in the dense trading zone, but the impact will be temporary.

A crucial insight for small and medium-sized investors is that in terms of operation, if the stock you hold encounters the previous dense zone during an upward trend, do not be easily "intimidated." Especially if the stock price is stuck in the previous dense zone and undergoes adjustment, with sufficient turnover (generally exceeding 100%) and increasing trading volume during the upward move, then this resistance level is likely to be broken, and the breakthrough will not be very heavy. The key to a comprehensive understanding of the "dense trading zone" is to dynamically observe the market.