Nifty and RSI divergence. It is all about knowing your indicator well. Quick video (Hindi) :-)

Thread: Decoding 2-period RSI

#trading

2-period RSI is a popular concept introduced by Larry Connors.

Many traders are using this method in their strategy.

There are two simple rules in the strategy that Larry Connors explained.

For buying:
• Price should be above 200-DMA (Long-term trend is up)
• 2-period RSI should be below 10 (better below 5)

For selling:
• Price should be below 200-DMA (Long-term trend is up)
• 2-period RSI should be above 90 (better above 95)

He also recommended exiting trades in profit. Exit if stock goes above 5 DMA after buying and exit of stock goes below 5 DMA after shorting. You can use DMA, higher period RSI such as 5 period or 14 period, ADX, Super trend etc. Possibilities are endless.

Bottom line is that he recommended exiting into profit instead of trailing. He did not recommend stop-loss because it can hurt the overall profitability according to him.

Let’s focus on the 2 rules stated above.

What is the logic of the system? It is a pullback trading system.

Thread: Parabolic SAR Indicator

Parabolic SAR (PSAR) indicator was developed by J. Welles Wilder.

#PSAR #Indicators #Definedge

The calculation of this indicator is a bit complex, but the concept is extremely useful. I will try to simplify it and explain the logic. I will briefly explain the concept, calculation and reading.

Let us think about creating an indicator that shows the trend.

Using the indicator, we can identify & ride the trend using the trailing stop-loss method.

For trailing the stop in uptrend, indicator needs to be placed below the candle. Similarly, it should be placed above the candle for trailing in a downtrend. We will plot it using ‘dots’.

So, the indicator & stop-loss will be rising in uptrend & falling in downtrend.

Let us define the trend as:

If Low of the candle > Stop-loss level in bull market = Trend remains bullish.

If High of the candle < Stop-loss level in bear market = Trend is bearish

Imagine you are driving a car on highway; you would like to accelerate if the road is clear. You will slow down if the road is bumpy.

Thread: 5 Important bullish & bearish chart patterns in technical analysis.

Triangles, Broadenings and Rectangles.

#trading #investing

Many traders analyse and practice western chart patterns. There are many such patterns and enough is talked about them in various books and resources.
Long back, I read a book “Encyclopedia of Chart Patterns” by Thomas N. Bukowski. It’s a brilliant work (Must read).

He backtested many patterns & ranked them based on their performance. Most imp is that he separated the patterns based on their performance in uptrend & downtrend.
I read about those patterns at many other places & in different theories and I realised that most of them are-

-variations of broad category of patterns. I have bifurcated these patterns in various categories.

Triangles, Broadenings & Brackets or Rectangle patterns are most common & effective patterns. Below are 5 bullish & bearish proven, time-tested patterns of these categories.

Bullish Patterns:
Rectangle Breakout:
Horizontal pattern breakout. Price remains between two horizontal lines before upward brkout. Its a decent continuation breakout pattern when appears in uptrend. Reversal pattern when appear in downtrend (Decent Risk-reward). Tend to pullback

Thread: Pivot levels

Trading based on Pivot levels is one of the popular approaches. Both short-term and intraday traders track Pivot levels to identify support and resistance levels in any instrument.

Let’s discuss how these levels are calculated.

The pivot calculation method considers the previous day prices to calculate the support and resistance levels.

There are seven levels marked on the chart when we plot Pivot as a tool.

There is a Pivot level, 3 support levels (S1, S2 & S3) & 3 resistance levels (R1, R2 & R3).

We have four prices for any trading session - Open, High, Low, Close.

They give us the important information about what happened during that session. Levels is calculated using the High, Low & Closing price of the previous day. Let’s understand Pivot calculation with an example

The difference between high and low is a range of the day.

High – Low = Range
In our example, range of the session is 10 points.

105 – 95 = 10

Mid-price of the session is average of high and low price.

The Mid-price in this case would be 100.
(105 + 95) / 2.

Mid-price is average of range of the session. How about including the closing price to this calculation?

If we calculate the average of High, Low and Closing price - we get the Pivot point.

(105 + 95 + 103) = 101 is the Pivot level in our example.

A simple #swingtrading strategy
1. Whenever you see a stock in strong uptrend it will tend to take support on its 21 ema.
2. Always look whether the stock has taken support previously.
@kuttrapali @rohanshah619 @chartmojo @chartworldat
#adaniports #balajiamine #jswsteel

3. 21 ema will act as dynamic support in a trending market
4. Risk: Reward is favourable in such setups
5. 50 ema can also act as support which can be kept as stoploss for swing trading
6. Volume should be less during pullbacks .
#nifty50 #stockmarket #CHARTS

#Nifty
March20 low of 7511, taking 75 days trading cycle , here's an observation

The low or high made on each 75th day, when crossed and closed above/below it , market has moved in that direction for the next 75 days, happened twice so far, next such date to watchout is 16 Feb.

A month gone by and this analysis is working out well so far 😉🤑

60 minutes of live session on how to do your own stock research for trading with examples.