Sunday, 12 February 2012

NIFTY TECHNICAL ANALYSIS





CHART READER

Strongly Bullish
  • 18d MA is above 50d MA
  • Both 18d MA and 50d MA are RISING
  • Gap between 18d MA and 50d MA widens
  • Any pull pack DOES NOT reach 50d MA
Mildly Bullish
  • 18d MA is mostly above 50d MA
  • 50d MA is RISING
  • Rising 18d MA goes slightly above/below 50d MA
  • Gap between 18d MA and 50d MA changes frequently
  • Any pull pack may touch and breach 50d MA
Strongly Bearish
  • 18d MA is below 50d MA
  • Both 18d MA and 50d MA are FALLING
  • Gap between 18d MA and 50d MA becomes wider
  • Any rally DOES NOT reach 50d MA
Mildly Bearish
  • 18d MA is mostly below 50d MA
  • 50d MA is FALLING
  • Falling 18d MA goes slightly above/below 50dMA
  • Gap between 18d MA and 50d MA changes frequently
  • Any rally may touch and pierce 50d MA
Range Bound
  • 18d MA snakes around 50d MA
  • 50d MA is mostly flat
  • Gap between 18d MA and 50d MA changes frequently
  • Rallies and Selloffs goes above and below both averages


RSI(14) - RELATIVE STRENGTH INDEX (14d)

  • Momentum Leading Indicator. RSI turns ahead of the Price Action
  • Rising Indicator signifies strength the market. RSI above 70, market is OVER BOUGHT
  • Falling Indicator signifies weakness in the market. RSI below 30, market is OVER SOLD
  • Draw support and resistance on RSI indicator
  • Watch for very reliable Positive and Negative Divergences b/w RSI and Price Movement
    • Negative Divergence : A new High in Price fails to take the RSI indicator above the previous High (or makes a Lower High)
    • Positive Divergence : When the Price fails to a new Low, RSI indicator does not go below the previous Low (or makes a Higher Low). Refer Price/RSI on Nov 23, 2011 and Dec 20, 2011. Price moved to a new LOW but RSI made a Higher LOW

SLOW STOCHASTIC (%K 15d, %D 5d)

  • Consist of two momentum oscillators %K and %D. %K being more sensitive of the two
  • Oscillator above 80 signifies that the market is OVER BOUGHT, below 20 means the market is OVER SOLD
  • Watch for the divergence between Price action and %D oscillator
  • BUY signal is triggered at Market Bottom when %K line crosses at the right side of the %D-Low-Point. Reliable Signal
  • Hinge, which refers to the slowing down in the velocity of either %K or %D signals reversal in next trading period

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