Today! The A-share market is in a sideways consolidation for the 5th trading day, lacking the momentum to rise, yet supported by mysterious funds when it tries to fall, resulting in a stalemate in the market, which is truly tormenting and troublesome.

Precisely because the A-share market has been consolidating for 5 trading days, it will exhibit a "riddle-like" trend, drawing the market, institutions, and investors into a "riddle game," leaving everyone puzzled about the current direction of the A-shares. Are they forming a bottom or is it a continuation of the downtrend with a sideways consolidation?

Building a Bottom

When major indices show signs of forming a bottom, the most evident characteristic is a strong volume reversal, which means consecutively pulling out 2 to 3 large bullish K-lines, quickly moving away from the bottom.

Perhaps a sideways fluctuation is formed at the bottom, and during this fluctuation, the purpose is to accumulate shares; therefore, if a bottom is being formed, the most obvious sign is an increase in volume, and gradually building up volume.

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Looking at the volume situation, the A-shares have not seen an increase in volume over the past five trading days; instead, they have been gradually shrinking, even reaching record lows. The volume of the Shanghai and Shenzhen markets has already contracted to 560 billion, which does not match the characteristics of a bottom formation.

Continuation of a Downtrend

The so-called continuation of a downtrend means that after the previous decline, there is a brief pause halfway through the downtrend, and after the pause, there is another round of selling that pushes the market to the next lower level. In simple terms, it is just a trap to lure more buyers, attracting those who will take the bait.Similar to the recent situation in the A-share market, the center of gravity of major indices has shifted downward. Currently, the Shanghai Composite Index has formed a brief consolidation platform around 2,850 points, where every day is listless, with both gains and losses being restricted.

There is a saying in the stock market, "Hanging for too long is not a good thing." Today is the fifth trading day of consolidation in the A-share market. Whether this consolidation is a continuation of the downtrend or not, we will likely find out soon.

Building a Bottom vs. Continuation of the Downtrend

Based on the performance of the A-share market in the past five trading days, this consolidation is most likely a continuation of the downtrend, rather than the building of a bottom.

If the current A-share market is indeed a continuation of the downtrend, it indicates that the current phase of the market has not yet ended, and 2,845 points are not the stopping point. The real stopping point is still lower.

If one does not believe that the current A-share market is a continuation of the downtrend, then the remaining are optimists who believe it is building a bottom. Unfortunately, the A-share market has not shown any characteristics of building a bottom at present.

Therefore, it is better to believe that the consolidation is a continuation of the downtrend, rather than believing that the A-share market is building a bottom.

In conclusion,From the analysis above, it is determined that the sideways consolidation of A-shares over five trading days is a continuation of the decline, not the construction of a bottom; given this, it indicates that the risk of A-shares' decline has not been eliminated, and investors should still be cautious.

However, on the other hand, despite being a continuation of the decline, the space for further decline is very limited. On the contrary, a decline presents the best opportunity for buying on the dip, so let's wait and see.