Exiting the School of Thought: Tips for Short-term Rebound Bull Stocks

StrawberryIce · 2026-02-07T08:32:03+00:00

The "Dragon Returns" pattern is a technical analysis model in the stock market, suitable for situations where a stock experiences an initial rise, then pulls back, stabilizes, and rises again. Its characteristics include support near key moving averages and signals of increased trading volume. When operating, it is necessary to assess whether the stock price has stabilized and identify support levels. Additionally, strategies such as phased position building or chasing the rally can be employed, combining multiple factors to improve judgment accuracy.

StrawberryIce

2026-02-07 08:32:03

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“Dragon Head Turn” Pattern Detailed Explanation:

After a stock experiences a strong first wave of upward movement, if it pulls back, stabilizes, and quickly resumes the upward trend, it often indicates a very good entry point.
During the upward process, trading volume continues to effectively expand, revealing active market participation.
The shorter the pullback duration and the smaller the pullback amplitude, the more favorable it is for subsequent upward momentum.
During the pullback phase, if the “Dragon Head Turn” stock finds support near key support levels or important moving averages, its reliability is significantly enhanced.
If a strong stock experiences a “Dragon Head Turn” due to a deep market correction, such stocks often have higher attempt value.
If the stock price’s continuous rise is supported by themes and aligns with market hotspots, it is even more ideal.

“Dragon Head Turn” Pattern Characteristics:

After hitting the daily limit, the main force conducts short-term shakeout and consolidation.
When the stock price retraces to a significant moving average, it receives support and triggers a new round of upward movement (accompanied by high trading volume).

Practical Screening Conditions for “Dragon Head Turn”:

The “Dragon Head Turn” must be led by a leading stock, which should at least have thematic support and align with current market hotspots. The absolute leader or phased leader within the sector, experiencing its first major decline or initial adjustment. The leader’s rank should be at least Dragon 1, followed by Dragon 2.
During the upward process, trading volume must expand with a clear effect; it should be accompanied by several daily limit boards, ideally more than five turnover boards. Lack of daily limit boards makes it difficult to gather momentum, and rebound strength may be limited, risking entering a correction.
In the previous upward phase, trading volume should have accumulated; during the correction and consolidation phase, it is best to keep volume extremely low, with no significant rebounds, which is more ideal.
The adjustment period should be between 3 to 10 trading days, with an ideal range of 5 to 7 days. Less than 3 days may be insufficient for adjustment, affecting subsequent upward strength; more than 10 days is too long, making it difficult to gather momentum again.
During the correction process, if the “Dragon Head Turn” stock finds support near key support levels or important moving averages, its reliability is further enhanced; if triggered by a major market decline, such stocks tend to be more operable.

Practical Difficulties in “Dragon Head Turn” Operation:

The difficulty lies in judging whether the stock price has truly stabilized, identifying important support levels, and capturing the second launch point.
Important support levels can be judged based on candlestick patterns and chip distribution; if the stock price breaks below key support levels, timely stop-loss is necessary.
For grasping the launch point, those with weaker market analysis skills can adopt a phased position-building strategy, adding more positions as the stock price rises; investors with certain analysis skills can use chasing-the-rally buying methods when volume increases.
Combining multiple factors such as order book time-sharing patterns, volume-price relationships, sector linkage, and overall market conditions can greatly improve operational accuracy.

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