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Bottom-fishing requires a method. The most direct way to judge a shift from weakness to strength is to see a bullish reversal candle after a decline. Crude but effective. Today I will share with you a classic pattern of buying on a long lower shadow candle. This is the first time I am explaining this setup in detail, especially for traders who like to follow moving averages. This pattern must be well understood.
**First condition**: The pattern appears near the bottom of the stock price. The 10-day and 20-day moving averages are in a bullish alignment, indicating that the market is in the early stage of an upward cycle.
**Second condition**: The stock price oscillates above the 10-day moving average, usually implying that the main force has begun to build positions in batches. During this phase, the stock price may experience a short-term pullback, and during this pullback, a long lower shadow candle appears, accompanied by decreasing volume. This precisely indicates a lack of short-selling momentum and effective support at this time.
**Third condition**: The next day, the stock price turns positive and does not make a new low. If this bullish candle appears, it indicates that the main force's shakeout has concluded.
**Fourth condition**: Don't underestimate the rise of the bullish reversal candle — it can be small, but the closing price must be above the 10-day moving average. This is crucial.
These four points may seem simple but are actually very powerful. Mastering this pattern can help you find many opportunities during pullbacks.