How to catch the second wave of main force after the limit-up? Many trading experts point to the same line—the 20-day moving average.

This line may seem simple, but it is actually the key to insight into the main force's intentions. It represents the market's average cost over the past month and is also the lifeline of medium- and short-term trends. During the pullback phase after a strong rally and limit-up, it often becomes the bottom line for main force shakeouts, and also serves as a touchstone for trend continuation.

**Price Movement Rules After Limit-Up**

The process is quite clear. First, the stock price surges strongly and hits the limit-up, staying far from the moving average, with the greatest risk—profit-taking is abundant. Then, the price actively pulls back, aiming to clear floating shares, and this pullback usually touches near the 20-day moving average. The final step is the most critical: if the price finds support at the moving average and stabilizes with a rebound, it is a classic "rebound" entry point.

Imagine the power of a fist pulling back and then striking again—this is the core logic of this strategy. The difficulty lies in judging whether it is a genuine support rebound or a breakdown indicating weakness.

**Is Volume Increasing or Shrinking?**

There is no absolute answer; it must be considered in conjunction with specific positions and patterns. But two reference directions are worth noting:

What does shrinking volume during a pullback to the moving average indicate? Light selling pressure, good lock-in of intra-market chips, and no signs of main force offloading. Conversely, if volume expands during the pullback but the price does not break below, it suggests a large amount of capital exchange at a key level, likely main force eating retail investors’ sell orders and completing a handover.

**Three Key Confirmation Signals Cannot Be Ignored**

Besides observing the interaction between price and the moving average, pay attention to these three points:

First, the direction of the moving average itself. The 20-day moving average must remain upward or flat; this is the foundation that the trend is not broken. If the moving average has already turned downward, the support strength is significantly weakened.

Second, the extent of the pullback. Ideally, the retracement from the high point of the limit-up should not exceed 10%-15%, and it’s best completed with gentle bearish candles or doji stars. If there is a sharp decline or deep fall, be alert to the risk of trend reversal.

Third, the K-line pattern indicating a halt in decline. The appearance of clear support signals near the moving average—long lower shadows, small bullish bodies, or bullish engulfing patterns—are direct evidence of bulls regaining strength.

**Three Situations to Judge the Effectiveness of the "Rebound" Entry Point**

Situation 1: After the limit-up, a 3-5 trading day shrinking pullback, precisely retracing to the 20-day moving average and stopping, with the moving average still trending upward. This is usually a standard shakeout under main force control, with the highest success rate upon first contact.

Situation 2: During the pullback, the price briefly breaks below the 20-day moving average but quickly recovers within 3 trading days, forming a "break then establish" false breakdown pattern, followed by volume-driven rally. This is a more aggressive shakeout; once the moving average is regained, the chance for an upward move is often greater.

Situation 3: The stock price oscillates sideways above the moving average, forming a small consolidation platform, during which the moving average steadily rises and finally supports the price. This indicates effective support; after consolidation ends and a breakout occurs, it is also a good entry point.

**Three Common Patterns and Their Characteristics**

In practice, the "rebound" pattern mainly falls into three types: precise retracement, breakline reversal, and sideways consolidation. Each has different details and risk controls, requiring flexible response based on the market situation. Precise retracement is the most direct and relatively controllable; breakline reversal is more forceful but carries the risk of false breakouts; sideways consolidation indicates support is solid but requires patience for a breakout signal.

Mastering these will allow you to preemptively position yourself for the next rally amid the main force’s shakeout movements.