Does the stock market see a sharp recovery after a sharp fall?

Friends,

Let's learn something new today as always. I often tell my students about the psychology of the ball in the market.

The psychology of the ball works in a very qualitative way in the market. Now you are thinking what is this principle of the ball.

Let's understand it.

We all must have noticed one thing that the faster the ball is thrown, the faster it bounces. But for that it is necessary that the ball is thrown on a strong surface/wall. As you can see in the given image.

Is it right?

On the other hand, if the surface is weak, then the ball will probably stop there instead of bouncing. As you can see in the given image.

But the thing to note here is that to reverse the ball, it is necessary for it to hit the surface/wall. If we think that we have thrown the ball with full force and it reverses without hitting any surface/wall, then it is completely wrong.

Similarly, a strong recovery after a sharp fall in the market is possible only when our support level is very strong. If the support level is not strong, then the stock will go below the support during that fall and in such a situation it will go down further due to panic selling.

Yes .. it is true that we should look for buying opportunities during a sharp fall but we should never enter the trade during a sharp fall or a sharp rise.

We should wait for the lower support and take further decision by observing what changes have taken place in the stock price after reaching that support level.

Hope the post will be useful for you.

Thank you