The ending diagonal(green) has bigger rally potential while the corrective up(Red) likely to lose momentum around 5300-25. It gets negated above 5330.
JustNifty TA (17th Oct)
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Posted by Ilango at 4:31 PM 11 comments Links to this post
Labels: Ending Diagonal, Tech.Table
TUESDAY, SEPTEMBER 20, 2011
Nifty opened at Day pivot, paused around DHEma/ holding well above HLEma, moved past & closed above Friday's resistance of 5125-30.
JustNifty TA(21st Sep)
BankNifty TA(21st Sep)
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Posted by Ilango at 4:13 PM 4 comments Links to this post
Labels: Tech.Table
FRIDAY, APRIL 1, 2011
Nifty closes above all averages.
Nifty closed above all week/ day averages. So far overbought conditions have been corrected with intraday moves except in the case of Bank Nifty. Nifty is closer to another channel resistance point of Day-R2.
Observe how the short term pivots are moving above med. & long term pivots as do the averages.Similarly keep an eye on the High/ low emas positioning too to suggest strength/ weaknesses vis-a-vis different time set ups. There are more such observations could be made out of the Tech.table.
Once the "Hour lead indicator" starts to make "dots" above the 80 mark, an early indication of a trending move can be spotted...follow it up in the daily time frame and so on.Similar observations has been observed during downtrend too.
"Tomorrow's game too shall pass"..
Posted by Ilango at 5:15 PM 8 comments Links to this post
Labels: Tech.Table
TUESDAY, FEBRUARY 1, 2011
Nifty Premarket View.
How to use the Tech.table numbers for trading: I have shown below in the chart. There are no "fixed rules" here. Read the earlier post on it by typing in the "Search this blog". It is a good reference table. Once you understand the undercurrent of the market: downtrending, down & getting exhausted, down& exhausted& signs of bottoming, down & bottomed, reversal to Up, UP & overbought and so on.
In a sideways market namely consolidating during uptrend or consolidating in downtrend or pausing to make its mind about reversal, the Low Ema and High Ema range gives you tradeable points.
ROC(Rate of Change): It is another momentum indiactor. It is as good as any other indiactor with its limitations. It reflects divergences quite well. 12 period is a classic number. Though I have used it extensively earlier, I have found macd & stochastics combination to give the required direction.
EW Counts: Remove those words of "Proving me wrong" - no seroius trader will get into that kind of act. No labeling is etched in stone. We use labeling as the market unfolds to put it in perspective. As long as the market moves on expected lines, the labelling remains and the moment a deviation occurs, it alerts you to the alternative scenario. It has helped us tremendously so far and it'll continue to do so in future as well. There are many traders who are quietly doing it with great amount of success as long as they remain grounded with a strong sense of self-belief.
No method works 100% of the time. However, identifying different method at different times maximises your gains.
Till 5801 is scaled in quicker time, downtrend remains with short term bounces & rallies. Scaling 61.8% & 80% retrace of 5654 & 5724 are the early reversal possibilities. Till then the dreaded 3rd wave continues.
Posted by Ilango at 7:21 AM 59 comments Links to this post
Labels: Elliott wave, market Wisdom, Tech.Table
THURSDAY, JANUARY 20, 2011
Trading it the JustNifty way.
The oft repeated query is how to use the TT(Tech table) for trading purposes. There are improvements made in the TT over a period of time. Before you begin to read the tech table, you need to understand the market moves with the help of two basic classic technical indicators:
Trend indicator (Macd) & Lead indicator (Stochastics). Once you are able to put the segments of market uptrend with corrections with the use of the above two tools to be followed with market's downmoves with its share of corrective rallies, you will then be ready to integrate the numbers that are appearing in the tech. table to fine tune your trading plans/ executions/ management.
For eg: A buy in a lower time frame while the higher time frame is in BUY MODE would be a valid signal. (If you get a price closing above Day Low Ema while it is staying above Week Low Ema, it is a valid & viable one., exceptions when a market is reversing with +ve divergences). You read your tools starting to give a buy from oversold region, prices would close above the "Low Ema" of that time frame in the TT(depends on the hour/ day/ week TA).
Once the prices close above Low Ema, it is "Buy on Dips" for the short term until prices close above "Close Ema" signalling a "Hold". The prices are then expected to close above "High Ema" indicating momentous moves ahead and you may plan your trades accordingly by adding more for the short term swift gains.
In a sideways market, the prices tend to oscillate between High & Low Emas.
Similarly when the TA tools indicate a overbought with negative divergences, the prices will close below "High Ema" to suggest a "Loss of momentum" signalling a "Sell on Rises" and confirm it with a close below "Close Ema" for a hold and once closes below "Low Ema", the downward momentum will accelerate.
For Positional Traders, the TT has JNSAR and J10.SAR numbers to initiate trades which is a simple "Stop And Reverse" method.
If you can identify a larger trend change with TA tools, TT will confirm the same with its colour changing as the prices close below HEmas first followed by Day, Week and Month. You are safe as you side with these trend indicating colours. Do not go against them as one never knows how deep is the correction/ Fall or How high is the rally/ Upmove.
Besides these, TT also has Pivot table of three time frames & Fibonacci retracements to choose supports/ resistances for profit booking & re-entry.
If you can understand the rhythmic changes of the market (Using Elliot wave/ Technical Analysis), TT becomes a ready reckoner to choose the trading as well as investment numbers.
Yes, you can use the TT for individual stocks for an effective short term as well as Long term invertment/ trading purposes.
Always have JNSAR Trade,(Positional Trade) & Aggressive trades independently as per their criteria to maximise gains.
Use Option Strategy at critical moment to Maximise your returns.
Posted by Ilango at 7:20 AM 27 comments Links to this post
Labels: Nifty TA file use, Options Trading, Tech.Table, Technical Analysis
SUNDAY, NOVEMBER 21, 2010
Tech. Table made easy.
T-o-T Amit" has made some changes to these files that it has become absolutely easy to update with just 2 steps:
1. For each hour, copy the entire previous row, paste it in the next row.
2. Now key in the open, high, low & close for the current hour.
That's all..!! The Tech.table is updated with the latest data. You can key in the anticipated highs/ lows and check the developing emas too. Thank you, again, Amit.
Nifty
Tata Steel
SBI
(I will update more files as time permits)
Tech.Table reading
Applied Technical Analysis
Spend some time reading through the above two write ups. Making money in the market is not setting up a terminal and taking a position. It is like a game of chess... a game of football - there is always a different set ups developing and the one who is able to realise the subtle changes, exploits the same and benefita the maximum. And there are some very disciplined simpletons who repeat the known strategies time and again and keep winning with a disciplined appraoch.
Doubts come when you are on the path of progress and you must quickly sort them out, find the answers and move on..You can't have the same doubts time and again.
Just one strategy, dear to me, will fetch you the highest returns most of the time.......... Divergence Play along with Break out/ Break Down..
Posted by Ilango at 10:13 AM 17 comments Links to this post
Labels: Tech.Table, Trading methods
SATURDAY, JANUARY 23, 2010
Technical Analysis with Moving Averages - SMA & EMA.
Traders have seen the invention of hundreds of indicators. While some technical indicators are more popular (macd, Stochastics) than others, few have proved to be as objective, reliable and useful as the moving average (MA).
Moving averages help technical traders track the trends of stocks by smoothing out the day-to-day price fluctuations, or noise.By identifying trends, moving averages allow traders to make those trends work in their favor and increase the number of winning trades.
Every type of moving average is a mathematical result that is calculated by averaging a number of past data points. Once determined, the resulting average is then plotted onto a chart in order to allow traders to look at smoothed data rather than focusing on the day-to-day price fluctuations that are inherent in all financial markets.
The simplest form of a moving average, appropriately known as a simple moving average (SMA), is calculated by taking the arithmetic mean of a given set of values. For example, to calculate a basic 10-day moving average you would add up the closing prices from the past 10 days and then divide the result by 10.
These curving lines are common on the charts of technical traders, but how they are used can vary drastically. It is possible to add more than one moving average to any chart by adjusting the number of time periods used in the calculation. These curving lines may seem distracting or confusing at first, but you'll grow accustomed to them as time goes on.
The simple moving average is extremely popular among traders, but like all technical indicators, it does have its critics. Many individuals argue that the usefulness of the SMA is limited because each point in the data series is weighted the same, regardless of where it occurs in the sequence. Critics argue that the most recent data is more significant than the older data and should have a greater influence on the final result. In response to this criticism, traders started to give more weight to recent data, which has since led to the invention of various types of new averages, the most popular of which is the -
Exponential moving average (EMA):
The exponential moving average is a type of moving average that gives more weight to recent prices in an attempt to make it more responsive to new information. This type of moving average reacts faster to recent price changes than a simple moving average. The 12- and 26-day EMAs are the most popular short-term averages, and they are used to create indicators like the moving average convergence divergence (MACD). In general, the 50- and 200-day EMAs are used as signals of long-term trends. EMA responds more quickly to the changing prices. EMA has a higher value when the price is rising, and falls faster than the SMA when the price is declining. This responsiveness is the main reason why many traders prefer to use the EMA over the SMA. Below Tech.table will vouch for the efficiency of EMA (Note the change in colours alerting instantly).
Moving averages are a totally customizable indicator, which means that the user can freely choose whatever time frame they want when creating the average. The most common time periods used in moving averages are 5,10, 20, 30, 50, 100 and 200 days. Alternatively, fibonacci believers use 3, 5, 8, 13, 21, 34, 55, 89, 144, 233 days. The shorter the time span used to create the average, the more sensitive it will be to price changes. The longer the time span, the less sensitive, or more smoothed out, the average will be. There is no "right" time frame to use when setting up your moving averages. The best way to figure out which one works best for you is to experiment with a number of different time periods until you find one that fits your strategy.
Primary functions of a moving average are to identify trends and reversals, measure the strength of an stock's momentum and determine potential areas where an asset will find support or resistance.
Identifying trends is one of the key functions of moving averages, which are used by most traders who seek to "make the trend their friend". Moving averages are lagging indicators, which means that they do not predict new trends, but confirm trends once they have been established. This "lag" is somewhat mitigated by the arrival of EMA.
A stock is deemed to be in an uptrend when the price is above a moving average and the average is sloping upward. Conversely, a trader will use a price below a downward sloping average to confirm a downtrend. Many traders will only consider holding a long position in a stock when the price is trading above a moving average. This simple rule can help ensure that the trend works in the traders' favor.
To measure momentum, pay close attention to the time periods used in creating the average, as each time period can provide valuable insight into different types of momentum. In general, short-term momentum can be gauged by looking at moving averages that focus on time periods of 20 days or less(5,10,20).
Looking at moving averages that are created with a period of 20 to 100 days (25,50,100) is generally regarded as a good measure of medium-term momentum.
Finally, any moving average that uses 100 days or more (100,200) in the calculation can be used as a measure of long-term momentum.
One of the best methods to determine the strength and direction of a stock's momentum is to place three moving averages onto a chart and then pay close attention to how they stack up in relation to one another. The three moving averages that are generally used have varying time frames in an attempt to represent short-term, medium-term and long-term price movements. Strong upward momentum is seen when shorter-term averages are located above longer-term averages and the two averages are diverging. Conversely, when the shorter-term averages are located below the longer-term averages, the momentum is in the downward direction.
Support:
Another common use of moving averages is in determining potential price supports. It does not take much experience in dealing with moving averages to notice that the falling price of an asset will often stop and reverse direction at the same level as an important average. Many traders will anticipate a bounce off of major moving averages and will use other technical indicators as confirmation of the expected move.
Resistance:
Once the price of a stock falls below an influential level of support, it is not uncommon to see the average act as a strong barrier that prevents investors from pushing the price back above that average. As you can see from the chart below, this resistance is often used by traders as a sign to take profits or to close out any existing long positions.
Many short sellers will use these averages as entry points because the price often bounces off the resistance and continues its move lower. If you are an investor who is holding a long position in a stock that is trading below major moving averages, it may be in your best interest to watch these levels closely because they can greatly affect the value of your investments.
Stop-Losses:
The support and resistance characteristics of moving averages make them a great tool for managing risk. The ability of moving averages to identify strategic places to set stop-loss orders allows traders to cut off losing positions before they can grow any larger. Using moving averages to set stop-loss orders is key to any successful trading strategy.
Data Used in Calculation:
Most moving averages take the closing prices of a given asset and factor them into the calculation. It is my experience that it would be important to note that this does not always need to be the case. It is possible to calculate an "EMA"by using the close, high, low . When plotted on a chart or put in a "Tech.Table", these impact your analysis as well as your trading results in a very big way.
Finding an Appropriate Time Period:
Because most MAs represent the average of all the applicable daily prices, it should be noted that the time frame does not always need to be in days. Moving averages can also be calculated using minutes, hours, weeks, months, quarters, years etc. Why would a day trader care about how a 50-day moving average will affect the price over the upcoming weeks? On the other hand, a day trader would want to pay attention to a 5-Hour or 35 Hour average/ Ema to get an idea of the trading ranges. I have found the 5-hour High & Low Emas to be quite effective during intraday trading and 5 Day High & Low ema for positional trades.
Responsiveness to Price Action:
Traders who use moving averages in their trading will quickly admit that there is a battle between trying to make a moving average responsive to changes in trend while not allowing it to be so sensitive that it causes a trader to prematurely enter or exit a position.
Short-term moving averages can be useful in identifying changing trends before a large move occurs, but the downside is that this technique can also lead to being whipsawed in and out of a position because these averages respond very quickly to changing prices. It is highly recommended to look at other technical indicators such as Macd, Stochastics for confirmation of any move predicted by a moving average.
Beware of the Lag:
Because moving averages are a lagging indicator, transaction signals will always occur after the price has moved enough in one direction to cause the moving average to respond. EW STudy mitigates this "Lag". This again emphasises the point that no method should be used isolatedly to have consistent success in the markets. If you want to use only one method, then wait for the perfect set up and do your trades, though if the trades are a few but the success will be high.
Crossovers:
A crossover is the most basic type of signal and is favored among many traders because it removes all emotion. The most basic type of crossover is when the price of a stock moves from one side of a moving average and closes on the other. Price crossovers are used by traders to identify shifts in momentum and can be used as a basic entry or exit strategy. As you can see in the first chart, a cross below a moving average can signal the beginning of a downtrend and would likely be used by traders as a signal to close out any existing long positions. Conversely, a close above a moving average from below may suggest the beginning of a new uptrend.
The second type of crossover occurs when a short-term average crosses through a long-term average. This signal is used by traders to identify that momentum is shifting in one direction and that a strong move is likely approaching. A buy signal is generated when the short-term average crosses above the long-term average, while a sell signal is triggered by a short-term average crossing below a long-term average.
Moving Average Envelope:
Another strategy that incorporates the use of moving averages is known as an envelope. This strategy involves plotting two bands around a moving average, staggered by a specific percentage rate. Traders will watch these bands to see if they act as strong areas of support or resistance.
MA has also been used in the development of other indicators such as -
Moving Average Convergence Divergence (MACD)
One of the most popular technical indicators, the moving average convergence divergence (MACD) is used by traders to monitor the relationship between two moving averages. It is generally calculated by subtracting a 26-day exponential moving average from a 12-day EMA. When the MACD has a positive value, the short-term average is located above the long-term average. As mentioned earlier, this stacking order of the averages is an indication of upward momentum. A negative value occurs when the short-term average is below the long-term average - a sign that the current momentum is in the downward direction. Many traders will also watch for a move above or below the zero line because this signals the position where the two averages are equal (crossover strategy applies here). A move above zero would be used as a buy sign, while a cross below zero can be used as a sell signal.
Bollinger Band:
A Bollinger band technical indicator looks similar to the moving average envelope, but differs in how the outer bands are created. The bands of this indicator are generally placed two standard deviations away from a simple moving average. In general, a move toward the upper band can often suggest that the asset is becoming overbought, while a move close to the lower band can suggest the asset is becoming oversold. Since standard deviation is used as a statistical measure of volatility, this indicator adjusts itself to market conditions. The tightening of the bands is often used by traders as an early indication that overall volatility may be about to increase and that a trader may want to wait for a sharp price move.
Speed Kills, so usage of moving averages which smooths out the noise & Choppiness is your best bet to navigate your trading/ investments in this financial race field..Moving averages can be effective tools to identify and confirm trend, identify support and resistance levels, and develop trading systems. As with most tools of technical analysis, moving averages should not be used on their own(But tell that to my critic who uses just moving average chart to make perfect entry points), but in conjunction with other tools that complement them. Using moving averages to confirm other indicators and analysis can greatly enhance technical analysis.
This, more or less, covers all Technical analysis that are sufficient to make consistent money in the market - namely Trendlines, moving averages, Trend Analysis, macd, stochastics and the Tech.Table.
And that is "Getting Rich Slowly".
Posted by Ilango at 10:41 AM 10 comments Links to this post
Labels: Tech.Table, Technical Analysis
WEDNESDAY, DECEMBER 23, 2009
Nifty Technical Analysis Explained - 2.
5-D & 14-D: These are "Stochastics" indicators found in 8th&9th columns(H, I). A more detailed write up will be followed later. This indicator oscillates between 0 to 100 and helps in identifying "Overbought and Oversold" situations. It is generally observed as the prices of stock increase, the closing prices tend to be nearer to the upper end of the price range. As prices fall, the closing prices tend to be nearer to the lower end of the price range. This price range is selected for 5 days and 14 days and the positioning of the close price on any given day in this range is denoted as 5-D and 14-D. This confirms a rising, falling trend as well as Overbought and Oversold status. The colour changes to green when in uptrend and red when in downtrend.
Columns L shows the high point of 5 period range, Column M shows the Low point of 5 period range, Column N shows the high point of 14 period and Column O shows the low point of 14 period. Here too, the colour changes as the index maintains or makes new highs or makes new lows. Also of importance is these columns give you the ready break down or Break out points of 5 period or 14 period which keep changing as the days pass by.
PIVOT, Support & Resistances: These are shown in Column P,Q,R,S,T,U. and the same are copied and pasted in the Weekly Pivot table as well as the Daily Pivot table in the same sheet for easy viewing. The importance of Pivots & other S1,s2(supports) and R1,R2(Resistances) may be read here.
Weekly Pivot & Averages: These are collected from the same sheet as mentioned above as well as from Data.W (Colum V to Z). Use the close by averages, and other numbers for weekly trading strategy.
Daily Pivot & Averages: These are collected from the same sheet as mentioned above as well as from Data.D (Colum AH to AL for simple averages and column AN to Ar for emas). Use the close by averages, and other numbers for weekly trading strategy. Whenever the emas are above the simple averages, the near term strength is seen and the colour of the ema turns green and whenever the emas move below the simple averages, the colour of emas turn red. You can see all the emas have turned red as the near term strength is quite weak. And that is also an area bounces/ relief rally takes place. It is said "Market is weak when it is at its high and strong when it is at its lows" as advised by Robert Beckman of Elliott wave and hence EW encourages the trader to "Buy into the weakness and Sell into the Strength".
For the chart reading, I will cover it tomorrow.
Posted by Ilango at 7:42 AM 1 comments Links to this post
Labels: Tech.Table, Technical Analysis
TUESDAY, DECEMBER 22, 2009
Nifty Tech.Analysis File explained-1.
Pivot Sheet: As you key in the high, Low, High of any stock or Index, this table calculates the "Pivot" point, three supports & three Resistances. This could be used for trading purposes. For more on this, read "Pivot, Supports & Resistances".
Blog Data Sheet: This is the most important sheet in the file and it collects vital data automatically as you update the "Data.W(eek), Data.D(ay) and Data.H(our)" sheets.It has Date, High, Low & Close in the first four columns. If the high clears the previous two day's high, the colour changes in the cell. Similarly if the low breaks previous two day's lows, the colour changes telling us the change in the swing highs and swing lows.Generally a two day swing clearing is an indication of a change in direction. But there are also false breakout/ breakdown in this, hence I have taken 5-day high & Low breaking as one of the factors for "Conservative Trade" initiation.
5.Ema:This is placed in the 5th column(E) and it is the most important short term average. Unlike a simple moving average which averages the last 5 days prices equally, ema gives more weightage to the most recent prices by a mathematical calculation and thus it is a good indicator of short term strength or weakness of the market. The colour of the cell & the font changes to "Red" the moment the close price closes below this critical ema indicating the onset of weakness. And it changes to green if the close price closes above it indicating strength. As long as the weekly close was above this ema, the daily falls were bought into. Since the 18th Dec "weekly sell Signal" as per this ema, the first day resulted in a sell(21.12.09). Now the highly oversold daily as well as Hourly with positive divergences will attempt a reversal. For the week, the first week after the sell signal is the "fight back" week if there is any strength left in the earlier uptrend. A continued close below the week ema on 24.12.09 will more or less confirm a larger time scale reversal in trend. Similarly when the day close is closing below the 5day ema, a sell signal is generated and use this signal to sell in the hourly time frame everytime there is an intraday rally towards either hour ema or Hour high ema. Always give more weightage to the higher time cycle and play the lower time cycle till a "overbought or Oversold" situation arises in the higher time cycle when one should approach with caution but continue in the same direction.
High ema:This is placed in the 10th column(J) and it is the 5 day ema of the highs made on the previous 5 days giving more weightage to the most recent highs. Thus, as the Close price stays above this the upward momentum is intact and the market is expected to make continued up moves and new highs.The moment the close price closes below this, the colour changes to yellow and font to red signaling the onset of a correction. Sell on rises come into play and market will attempt during this period to move higher than this "High ema" during intraday but only a close above this will bring back a lasting momentum. Similarly the moment the close price closes above this the colour changes to green and font to green signaling the resumption of the upward momentum. Buy on dips come into play and market will attempt during this period to move lower than this "High ema" during intraday which generally is bought into but only a close below this will bring in a correction.
Low ema: This is placed in the 11th column(K) and it is the 5 day ema of the lows made on the previous 5 days giving more weightage to the most recent lows. Thus, as the Close price stays above this the uptrend is intact and any fall till this low ema may be construed as only a correction.The moment the close price closes below this the cell & font colour changes to red signalling the onset of a downtrend. Sell on rises come into play and market will attempt during this period to move higher than this "low ema" during intraday but only a close above this will bring back a "Neutral mode". Similarly the moment the close price closes above this the cell colour changes to blue and font to blue signalling the "likely end of a downtrend". Buy on dips for trading may come into play and market will attempt during this period to move lower than this "low ema" during intraday but only a close below this will continue the downtrend.
D.Macd & S.Macd: These two are placed in 6th & 7th Columns (F, G) and they are the values of fast macd(5,10,9) and Slow macd(12,26,9). As this numbers are ascending, it is in uptrend and as the numbers are declining, it is in downtrend and the colour changes to Red during downmoves and to Green in upmoves. For more on this MACD, please read an exhaustive write up here.
More on the "File & Chart Reading" tomorrow - Part-II.
Posted by Ilango at 6:34 AM 20 comments Links to this post
Labels: Tech.Table, Technical Analysis
TUESDAY, OCTOBER 20, 2009
Nifty's fall stops @ the short term trendline.
Subsequent to the sharp rise from 4935 to 5152 in 3 days, Nifty has been sideways with a corrective kind of intra day moves. Holding above 5067, it can move higher too if world cues are +ve.. Internal weakness is visible in the prices of last 3-4 days but a confirmation of a reversal is due from the markets. Until then, trade..
Daily weakness continues and gets reflected in the hourly prices..Break below 5077 & 5067 is an early warning and a break of 5020 decisively may end this rally..
What are these averages signify..? asks "Sudhin Bathija"...
There are "close ema" (appears after the close price of week, day & Hour), "High ema" & "Low ema".
High ema- staying above it indicates upward momentum; below it downward momentum but if it stays above close ema during this period, it could simply be a correction.
Low ema- staying above it indicates uptrend is intact; below it the downward momentum increases..a follow up action is required.
Close ema- as highs and lows can be manipulated, the close price which is used to calculate most of the momentum oscillators plays quite an important price factor. Simply put, market is in uptrend above it and it is in downtrend below it in those time cycles.
These emas become useless once a trend is in place and they come to play some roles once a correction sets in after "OB" or "OS" situations.
There are more averages below the pivot table with colour changes depending on thier prices.
Avg: is a simple average which gives equal weightage to "n" number of period. for eg: a 5-day avg is calculated using last 5 days closing prices thereby giving equal weightage to all the past 5 days.
ema:emas are exponential moving averages which is calculated using a mathemetical formula that gives more weightage to the more recent prices thereby considered to be more dynamic as well as volatile.
Whenever "ema" value is more than the "avg" value, it means bullishness and whenever the "ema" value is lower than "avg" value. it signifies weakness/ bearish.
3, 5 ,10 are considered for short term; 20,30 days are considered for medium term; 50, 100, 200 days are considered for long term. These can be experimented with as market is evolving all the time. More traders become aware of a certain method or a pattern, a likely failure is possible. So keeping an open mind but at the same time using our own experiences manifested as our "Intuition" can guide us tremendously.
Posted by Ilango at 4:50 PM 7 comments Links to this post
Labels: Tech.Table
SUNDAY, NOVEMBER 23, 2008
Trend following & Tech. Table reading..
There are various time cycles operating in the market all the time like monthly, weekly, daily, hourly, 5-minute, etc and each has their own trend.
For eg.We have presently the weekly trend down, daily attempting & nearly achieving a reversal, hourly turning up on Thursday and so on.
To confirm a trend, market need to close above or below 5 ema. Why ema? Because they give more weightage to the recent price action unlike the simple moving average which gives equal weightage to the last 5 days closes. And also the slow macd (Difference between 12 & 26 ema) should be up and above its trigger (9 sma of macd).Why 5 ? 5 trading days a week..Besides, I have found it to be stable , though some use 3, 4 etc.
If I wait for a daily buy signal, I miss 200 points from the bottom before the trend turns up. And after the trend turns up , market pulls back as a correction before rallying further and you may end up holding at higher levels for a brief period of time. So we look for the hourly trend to take position but this should be done only when the daily is in oversold status.
Similarly when the hourly is in oversold status, look at 5 minute to give you a buy signal for a possible reversal in hourly.On the fateful 27th Oct, Nifty's low of 2253 was accompanied by an excellent +ve divergence which helped to take a buy call even before the hourly buy signal.
If you see the Tech table in which Market is shown to be down in weekly (always closing below 5 ema) and in daily (Closed above 5 ema but macd is yet to move above the trigger and still closed below the 5 high ema).
5 High ema tells you the upward momentum in Nifty. As long as it closes below it, it is sell on rises.(So for Monday, Nifty needs to close above 2750 (high ema) to sustain the Friday's momentum..Just intra rally above 2750 is not enough). If it closes above it, then buy on dips & hold longs.Use it in conunction with weekly, daily, hourly.
5 Low ema tells you the downward momentum in Nifty. As long as it closes below it, it is hold shorts.If it closes above it, it is buy on dips & sell on rises till it closes above 5 high ema.
In simple terms
....Up & buy on dips above 5 high ema
....dn & sell on rises below 5 low ema
....sideways & trade supports & resistances as long as it closes
inbetween 5 high ema & 5 low ema.
These are certain indicative tools and not an absolute one for trading.
Use always channels for your trading along with other supportive indicators. the primary guide should be prices and that travels within channels most of the time. Channels most often break during a 4th wave. So keep that in mind. (Eg. Say a downtrend develops in to a 5 sub waves. After 1 dn, then 2nd up, then a 3rd dn and now on its 4th up. Draw a line connecting 1st bottom and the 3rd bottom. Bring a parallel line touching the 2nd top and you will find the 4th wave breaking this top trend line briefly and move back into the channel and make a low and then rise breaking this channel decisively. Barring these, Channels offer excellent trading guides.
Observe in all the "SAR" charts posted here, how these channels have helped in intra days and even helped in avoiding whipsaws.
Finally, an interesting article about the recent financial meltdown...you may have read the first few paragraphs already elsewhere but the last few paragraphs are the surprising ones. don't miss them.
Posted by Ilango at 11:17 AM 38 comments Links to this post
Labels: Tech.Table, Trend follow
FRIDAY, AUGUST 1, 2008
Nifty's High & Low Ema's for Trading.
As you can see from the Table above, Nifty's ema of "High", "Low", & "Close", have given good entry, exit, Resistance, support points. Same may be applied to Weekly for Investment purposes
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