Hexun Investment Advisor Feng Lushun: How Will the Robot Market Move Next?

On March 23, Feng Lushun from Hexun Investment Advisory stated that today the robot sector experienced a significant decline with a gap down, and the drop was quite sharp. It also moved far away from the 5-day moving average. Can this oversold condition lead to a rebound? Let’s analyze it through volume and price relationships. First, let’s see how this sector fell. During the previous upward wave, the volume-price relationship was abnormal: the stock price hit new highs, but the trading volume didn’t keep up, and the next day, a large-volume bearish candle appeared, which is a classic volume-price divergence. After such divergence occurs, we draw a horizontal line at the opening price of the divergence candle and at the midpoint. As long as the price can’t break above this line, it will likely retest the larger cycle. Currently, it has fallen to the May average line and even broke below it, now trading between the May and October lines. You can review that before each major rally in the robot sector, there was a retest of the larger cycle, forming long lower shadows, indicating that funds are supporting from below. Today is March 23, with only a few days left until the end of the month. It might form a long lower shadow by month-end, and once it breaks above the May line, a significant rally could follow. This aligns with my previous point: after a large cycle retest, a small cycle needs to stabilize. Now, it is building a bottom between the May and October lines, and a short-term rebound is likely because it is currently far from the 5-day moving average, which can trigger a rebound. But how strong will this rebound be? It must be confirmed by a large bullish candle that stops the decline and breaks through the 5-day line. A small bullish candle cannot change the pattern; only a large bullish candle crossing above the 5-day line can cause the 5-day and 10-day moving averages to cross bullishly, turning the MACD red, and leading to a big rally. Last week’s small bullish candle couldn’t change the pattern; only a large bullish candle can. Therefore, if you’re a conservative investor, wait for a confirming bullish candle that stops the decline and breaks above the 5-day average before acting. If you’re more aggressive, you can buy on dips when the price is far from the 5-day line, and sell when it rebounds to the 5-day line. For example, buying low last week, then selling when it rebounded to the 5-day line, and today it fell again. It’s best to sell into the close today; currently, the 3850 level may provide some support, but the bottom-fishing risk is high. Proceed cautiously with small positions. Larger positions should wait until a bullish candle appears that stops the decline and the 5-day and 10-day averages cross bullishly, at which point you can increase your holdings. Any major rally requires the moving averages to form a golden cross.