Back After A Gap

Hey..I am back after almost a gap of 10 days...these colleges xam kept me busy...Newaz..lot have happened in these 10 days...And things didnt go as i predicted..So i need to learn a lot..which means lota work left....Looking at the current NIFTY charts:

Base Chart Source:  www.icharts.in

If we llok at the 2nd Last Graph..i.e. The MACD graph... We see that the MACD Line(red line) is cutting blue line form above i.e. moving down while the markets are moving up, So there is divergence. Which indicates market might fall after going up a bit from current levels.

Also the last graph (RSI chart) indicates that teh line is going up and is about to cut 70 mark. When the line will cut 70 mark it indicates overbought position ans markets will fall from there. That is a lil bit up movemnets form current levels is expected in market.

I will not predict any levels now..as i need to learn a lot before predicting any levels.

Also when i say markets will fall...it dosent mean that a huge fall will be there...but a sort of correction will take place.. As the long term trend for market is bullish...

NIFTY based on some Indicators

Since i predicted that markets will move down (i predicted that on basis f what i have learned so far)..it moved donw only on Monday..that too slightly..but since tuesday a strong up move is observed....

                       Base Chart Source: www.icharts.in

Above is the NIFTY daily chart. I will introduce to you two indictors based on above charts. First is Bolinger Bands ( The blue thick area in the tiop Chart) and RSI (Relative Strength Indicator). I will post details of these two indicators later...(or you may go to the links i have posted in my earlier posts).

I will just explain here ....how to interpret market on the basis of the two indicators.

Bolinger Bands: In bolinger bands...when the chart touches the boundary of bolinger band then the markets will move in opposite direction...i.e. if in an uptrend chart touches boundary of bolinger band then the markets may fall...and for downternd its the opposite.....we cannot trade in any markets soleley on basis of Bolinger bands, we need some other indictors to confirm it
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RSI: RSI is the chart which is shown above within the green Box. RSI shows the overbought or oversold position. If the line is above 70 mark its overbought condition and if its below 30 mark then its oversold condition. If markets are overbought then they are bound to move in other direction i.e. downwards, If markets are in oversold condition they will move upwords.

From the above chart we can see that market chart as touched the bolinger band (red circle) and RSI shows that markets are in ovebought condition (blue circle).....These two indicators indicates that market from here should move downwards....

But u never know abt markets so wait and watch...over next 2 days.....as per my learning so far ( i mean der is lot more left to be learned) ..NIFTY shoud move downwards....

NOTE: Markets are rising on the news of good US data. Ben Bernanke's statement that " US recession is likely over" has created a positive sentiments in mind of investors and they went on buying spree on Wednesday..which was clearly reflected in the fact that all the markets across world rose and closed at very high levels. All aisan markets have reached at very high level...Looking a the positive sentiments there are all chances that markets will rise today as well...so lets see...

Today's NIFTY Movement

Today NIFTY opened in positive and closed at some 83.5 poitns above the previous day's close. Whats more important is it broke a crucial level of 4880 and closed above it. The NIFTY movemnet is given below:

For most of the day NIFTY traded above 4850 and finally crossed the 4880 level. Although I have predicted a downward movemnet of NIFTY in short term..based on some chart paterns and technical indicators...now NIFTY movemnets become crucial as it has crossed a crucial mark. Most of the stocks in NIFTY are at overbought positions but still its going up...So now it become important to Watch the NIFTY movemnets for over next 2-3 days beforme jumping to any conclusion....

Comments are solicited ..if some1 can point out if my analysis is goign wrong somewhere it will be very helpfull also if some one can different perspective....it will be great for every reader of this blog....

NIFTY Movements

The NFTY opened at around 4800 , down about 30 points from yesterday's close. It then moved up and down but remained very much between 4794 and 4815, Except for the last few minute where it broke the 4815 level went up but eventually closed at 4808.60 i.e. above 4800 levels. Below is the NIFTY movemnet for Monday

We can say that for Monday the up level (represented by red line) was around 4815 and the down level (black line) was around 4794 i.e. NIFTY Obserevd a resistance at 4815 and a support at 4794. Which means it closed slightl down with respect to is previous closed. As I predicted NIFTY will go down and will start moving downwards from monday....I still blieve that NIFTy is headed downwards in short term..But i am a bit cautious here as NIFTY is not going down by much in last 2-3 days...so the crucial level again becomes 4780..if its broken then there will be more downside....
Lets wait and watch

NIFTY Levels- Predictions

Well I am now going to do what makes every novice Techanical Analyst generally apprehensive... I am going to predict NIFTY support , resistance level based on whatever little I have gained so far, specially fibonacci retracemnet, which was introduced to me by one of my followers(changemasters).
The recent Uptrend started when NIFTY was at about 4350...NIFTY closed at 4829.55. Which means that in total from 4350 there is upmovemnet of about 479.55 points. Now using fibonacci retracemnet we get that NIFTY should find first support at 4717. If this support is broken then NIFTY will fall to 4647. Where it has support. But applying the Ternd theory I must say the first target for NIFTY should be 4770-4780.
So the short term targets for NIFTY are
1. 4770-4780
2.4717
3.4647
NIFTY has strong resistance at 4880-4900 levels.
Note: Once I have learned using Fibonacci retracement comprehensively, I will post how Fibonacci works and its basics....

Few Basic Terminologies

For those readers who dont have any idea about technical analysis, I would advise them to learn basics about Technical Analysis by clicking here. As I found this website very good in explaining about different chart patterns and indicators. Another good website for learning is Informed Trades.Com. Lots of videos are available on this site which gives very good undersatnding about the different techniques used in Technical Analysis.
There are two basic things in TA one is Chart Patterns and other is Indicators. I am listing some of those:
Chart Patterns
1. Double Top and Double Bottom
2. Head & Shoulder
3. Wedge Pattern (Upper and Lower)
4. Flag/Pennat
5.Traingles
Indicators
1. Relative Strength Indicator (RSI)
2.Moving Avg Convergence divergence (MACD)
3. Stoichastic
4. Bollinger Bands
5. Avg Directional Movement Index (ADX)
6. Parabolic SAR
These are some very basic chart patterns and indicators for more detaisl and indepth knowledge, visit the 2 sites mentioned above .

NIFTY Short Term outlook

before predictiong let me tell you some terminology








Spinning Top : The first diagram shows the candle stick which is known as spinning top. Here the upper and lower portion of wick ar almost same. This indicates markets are relatively unchangened from where it opened. If its observed in any trend then tis means that there will be reversal of trend.

Shooting Star: The second diagram represents a chart called as Shooting Star. If this pattern is observed in upternd then there is a chance of trend reversal.

Doji: The third diagrams represents a Doji. Here the markets close at levels where they opened. If this pattern is found in a trend then there is chance of trend reversal.
NIFTY Short Term View

If we look at the above chart we can se that the recent trend in NIFTY ( for last 5-6 weeks) has been an Upternd. Now if we look at the Orange circle part we can see that in last three days NIFTY has formed the Charts, Doji, Shooting Star and Spinning top which tells us that there are chances pf trend reversal in shprt term and NIFTY is bound to fall from here....in next 2-3 trading days NIFTY should start falling (if not from Monday).....and market are due for a correction. we are going to witness sell off in near future.

Another indicator which confirms this is Slow Stoichastic indictor( i will explain it later) which shows the following:


the red line i.e. %K line is cutting %D line from above and going below. Also it has alredy gone slightly below 80 mark. Whic shows that markets are about to fall....
So these are my predicitons..lets se what happens and keep posting ypur comments.....

Candle Sticks Chart

Before predicting the future movemnet of NIFTY its very important to know about candle stick chart ...because in current NIFTY chart they are playing a significant role...

Candle sticks are most widely used charts in TA...lets begin

Above are two candle stick charts....look at the first chart..it says that the open price (of stock etc) is 44...High is 55, Low is 11 and Close price is 25. Thus candle sticks reveal lot of informations....
The middle mart is called body of candle and upper and lower parts are called wicks...
For more on basics of candle sticks use follwoing link...
http://www.youtube.com/watch?v=b3NRuzQvuxA&feature=channel_page

Few important point to remember

Well I would like to point out something here..which i feel is very important while trading solely on basis of technical analysis....
1. Same techniques are not applicable everywhere and same technique will not give you same results everywhere

2. No technical analysis is 100% correct..actually TA is interpretation of Charts of price movements....Now there are chances that different people will intrepret same chart in different manner....Also more accuracy comes with more experience and practice

3. Most Important while trading using technical analysis putting STOPLOSS is mandatory...u shudnt trade without a stoploss

4. Out of the different techniques..no single technique is gud enuf for prediction..Using multiple techniques always give better result

5. TA dosnet works well when market behave very unxpectedly ...as was the case during the recent subprime crisis...

6. And ya..TA always looks great in hindsight :-)

So folks always keep these points in mind..i have gather these points thru my experience, several books and after taliking to experts....

Chart Patterns

well i have learned all about technical analysis from the video posted on informedtrades.com

I must thank David for posting those videos and thanks for all his efforts for explaining everything in such a lucid manner.....
For all charts i consult http://www.icharts.in/charts.htmln/charts.html where all basic charts are available for free.....
Now the from the first few lessons i learned about the different chart patterns....And i found one such chart pattern in NIFTY....The chart pattern is 'Double Bottom'











In above chart i have put two black lines...beteen these two balck line the pattern formed is called double bottom...as u can see that market fell twice (marked by two arrows)..when this happens there is chance of trend reversal and this xactly happened...when market break the top black line...they are bound to rise and there will b uptrend...the xtent of the uptrend can be found by the difference betwenn upper balck line and lower balck line...
Here Upper black line is rufly at 4400
Lower black line is roughly at 4600...so markets must move by 200 points (4600-4400) from the upper black line...so the target for NIFTY (short term) should be 4800....
Thats what exactly happened...

I will post more analysis soon.....
Till then post your comments...