tag:blogger.com,1999:blog-29755333499526364652024-03-23T15:44:34.589+05:30New approach to intraday & swing tradingThis blog is about stock market. In this blog basic concepts of stock market are explained and techniques about how to trade intraday and swing trading methods are explained. Avinash Bongardehttp://www.blogger.com/profile/11492605773113022410noreply@blogger.comBlogger18125tag:blogger.com,1999:blog-2975533349952636465.post-37901814748169517032021-05-01T23:33:00.002+05:302021-05-01T23:33:52.203+05:30Triple candlestick patterns<p> Triple candlestick pattern is an array of three successive candles which predicts the future trend in advance.</p><p>More often it predicts trend reversal after a long downtrend or uptrend.If triple candlestick pattern is confirmed with overbought or oversold conditions of an indicator (either stochastic or RSI) then the trend reversal may be confirmed & a better opportunity for swing trading may occur.</p><p>Triple candlestick patterns are rare phenomenon as compared to double candlestick patterns & unless & until not confirmed with other indicator or parameters may produce whipsaws.</p><p>Let's study one by one.</p><p><b>Three inside up triple candlestick pattern -</b></p><p></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0JE5aw3E8VcPglms5hVzf2bfQqDS0lm7dn4O2-TXrCH7XIrv9SV5iME9xfPwX5sq92C7TWWDSvkCEKJIyd8LI7Rgc_QgJV5lMzd1Eiay2hV18JV-t1OAtI0JPjKttI0mrSermtyOmGNY/s2509/PicsArt_05-01-09.54.07.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1411" data-original-width="2509" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0JE5aw3E8VcPglms5hVzf2bfQqDS0lm7dn4O2-TXrCH7XIrv9SV5iME9xfPwX5sq92C7TWWDSvkCEKJIyd8LI7Rgc_QgJV5lMzd1Eiay2hV18JV-t1OAtI0JPjKttI0mrSermtyOmGNY/s320/PicsArt_05-01-09.54.07.jpg" width="320" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Three inside up pattern</td></tr></tbody></table><br /><b><br /></b><p></p><p>It comes at the end of downtrend.It shows the following characteristics.</p><p>a. The first candlestick is long bearish candle.</p><p>b. The second candle is white.It's close price should be approximately at the midpoint of first bearish candle.</p><p>c. The third candle should close above the high of first candle.</p><p>The downtrend worsens when buyers keep themselves out of trade.At a perticular stock price,buyers become sure & enter into the trade.It makes the candle white.The third candle closing above the high of first candle indicates the influence of seller is now fading.</p><p><b> Three inside down triple candlestick pattern -</b></p><p></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgDHAeW6-tbRySl1fA122W7o0nuCf5ykQST3P8xVh0EbUkZqrNmEIS5kkAx0H47CK8-N5VTsnedsmAyYVmCRurGtKiGlSZCjjmfl534W1xbijb-x9zLuWFFkAQSxmDkuaXUJQt1li0lRMU/s2509/PicsArt_05-01-10.40.35.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1411" data-original-width="2509" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgDHAeW6-tbRySl1fA122W7o0nuCf5ykQST3P8xVh0EbUkZqrNmEIS5kkAx0H47CK8-N5VTsnedsmAyYVmCRurGtKiGlSZCjjmfl534W1xbijb-x9zLuWFFkAQSxmDkuaXUJQt1li0lRMU/s320/PicsArt_05-01-10.40.35.jpg" width="320" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Three inside down pattern</td></tr></tbody></table><br /><b><br /></b><p></p><p><b><br /></b></p><p>It is opposite to the previous pattern.</p><p>This candlestick pattern comes at the end of an uptrend.</p><p>a. The first candle is long bullish candle.</p><p>b.The second candle should be black & should close approximately at the middle of the first bullish candle.</p><p>c. The third candle should be black & close below the low of the first bullish candle.</p><p><b>Morning star -</b></p><p></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgDpbhTpiMhsWu5QO6TNftD6NxZ49C37RVscfmO0z8PkLFQuY7GDjcT4s_mL9f-ekeKARNVoCkSSrasnUOo6VnX4DWn7EkmhUWbWqwmdkjkKRigUEJdrSQ1KgHBmUKblrTUoL1irv6S93c/s2509/PicsArt_05-01-10.57.04.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1411" data-original-width="2509" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgDpbhTpiMhsWu5QO6TNftD6NxZ49C37RVscfmO0z8PkLFQuY7GDjcT4s_mL9f-ekeKARNVoCkSSrasnUOo6VnX4DWn7EkmhUWbWqwmdkjkKRigUEJdrSQ1KgHBmUKblrTUoL1irv6S93c/s320/PicsArt_05-01-10.57.04.jpg" width="320" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Morning star</td></tr></tbody></table><br /><b><br /></b><p></p><p>It is also trend reversal pattern.It comes at the end of downtrend.</p><p>The characteristic of morning star is as below.</p><p>a.The first candle is strong bearish candle.</p><p>b.The second candle is spinning top.This candle may either be black or white.As we already have seen, spinning top represent the indecision in the minds of buyers or sellers, whether the trend is going to continue or reverse.</p><p>c.The third candle should be white & should close ahead of the midpoint of first bearish candle.</p><p>It confirms that the buyers are now active & trend reversal is going to occur.</p><p><b>Evening star- </b></p><p></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiPvZrvhc8G8wK4XGogtdWNAk-mx78mFTxi5PI0LQtlwj4HHoDdiR_JPy2E6eNplBeZoSdzBlgLTVyOlaR481hL3DSclfFzONIa7PIy_H4b6rfkuGEZ_fkgVnc45xY99G9ld6ghoCiV7IM/s2509/PicsArt_05-01-11.08.56.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1411" data-original-width="2509" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiPvZrvhc8G8wK4XGogtdWNAk-mx78mFTxi5PI0LQtlwj4HHoDdiR_JPy2E6eNplBeZoSdzBlgLTVyOlaR481hL3DSclfFzONIa7PIy_H4b6rfkuGEZ_fkgVnc45xY99G9ld6ghoCiV7IM/s320/PicsArt_05-01-11.08.56.jpg" width="320" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Evening star</td></tr></tbody></table><br /><b><br /></b><p></p><p>It is opposite to morning star.It comes at the end of an uptrend.</p><p>a.The first candle is strongly bullish.</p><p>b.The second candle is spinning top, either black or white.If this indecision in the minds of traders after an uptrend at overbought level may reverse the trend.</p><p>c.The third candle should be prominent black closing below the midpoint of the first bullish candle.</p><p>Such a pattern at the overbought level confirms downtrend.</p><p><b>Three white soldiers - </b></p><p></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgRMfwqc2ae2LsjjPRPXM3GEoRd1Hj5b-TsaGMWT6xiSJQnKCxSxIcNAew8dtIZeK8yx71wH6LDM38TGNiIVjZPCV95bFX3Wlf_AS0d7nfmeMrJHgVreWBgRA86jmrv9RiTLUlvKWuF1bg/s2509/PicsArt_05-01-11.19.07.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1411" data-original-width="2509" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgRMfwqc2ae2LsjjPRPXM3GEoRd1Hj5b-TsaGMWT6xiSJQnKCxSxIcNAew8dtIZeK8yx71wH6LDM38TGNiIVjZPCV95bFX3Wlf_AS0d7nfmeMrJHgVreWBgRA86jmrv9RiTLUlvKWuF1bg/s320/PicsArt_05-01-11.19.07.jpg" width="320" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Three white soldiers</td></tr></tbody></table><br /><b><br /></b><p></p><p><b><br /></b></p><p>It comes at the end of downtrend.</p><p>a.The first candle should be small & white.</p><p>b.The second candle should be white & larger than the first.This candle should have less or no upper shadow.It do mean that close price & high price should be approximately same.</p><p>c.The third candle should be larger of three & have no or less upper shadow.</p><p>Less or absence of upper shadow indicates the absence of sellers & a strong uptrend.</p><p><b>Three black crows- </b></p><p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgqEI0GB86FuvDaK5DZyZVfAPRzQMDyqs3-hcVvUYbI64wAYyGzEcSEK16Bq-2lqWV_gDgCZGZcebbsG7tAEBm7pd6mAgHWNe73zfOa7MqicuPN2uTNitL3obLLehlRuk72Ye7qIbyV9hw/s2509/PicsArt_05-01-11.29.17.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1411" data-original-width="2509" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgqEI0GB86FuvDaK5DZyZVfAPRzQMDyqs3-hcVvUYbI64wAYyGzEcSEK16Bq-2lqWV_gDgCZGZcebbsG7tAEBm7pd6mAgHWNe73zfOa7MqicuPN2uTNitL3obLLehlRuk72Ye7qIbyV9hw/s320/PicsArt_05-01-11.29.17.jpg" width="320" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Three black crows</td></tr></tbody></table><br /><b><br /></b></p><p><b><br /></b></p><p><b><br /></b></p><p>It is just opposite of three white soldiers & comes at the end of an uptrend.</p><p>a.The first candle should be small & black.</p><p>b.The second candle should be black, more big than the previous.Also this candle should have no or little lower shadow,meaning low price & close price should be approximately equal.</p><p>c.The third candle should be largest of all & it's close price & low price should be approximately equal.It do mean sellers are becoming dominant & downtrend started.</p><p>As already stated, candlestick patterns alone doesn't predicts the exact future trend.These patterns should be coupled with indicators or other parameters.Easier way is to compare these candlestick patterns with oversold or overbought conditions of stochastic or RSI.</p><p>If these patterns are occurring at oversold or overbought level the trend may be confirmed.</p><p><b><br /></b></p><p><b><br /></b></p><p><b><br /></b></p><p><b><br /></b></p><p><b><br /></b></p>Avinash Bongardehttp://www.blogger.com/profile/11492605773113022410noreply@blogger.com7tag:blogger.com,1999:blog-2975533349952636465.post-42298186053124333962021-04-27T16:34:00.000+05:302021-04-27T16:34:43.436+05:30Stochastic RSI -The most sensitive oscillator<p> StochRSI is derived by putting RSI values in stochastic formula instead of putting stock price data,thus making the indicator more sensitive to changes in stock price.StochRSI is developed to benefit from both momentum indicators to create more overbought & oversold conditions.</p><p>Before going to study stoch-rsi let's see formulae of stochastic & RSI.</p><p><span style="font-size: medium;"><b>Stochastic- </b></span></p><p><span style="font-family: inherit; font-size: medium;">The formula to calculate stochastic oscillator is as below.</span></p><p><span style="font-family: inherit; font-size: medium;">%k={C-L14/H14-L14}*100</span></p><p><span style="font-family: inherit; font-size: medium;">Where,</span></p><p><span style="font-family: inherit; font-size: medium;">C=Previous close</span></p><p><span style="font-family: inherit; font-size: medium;">L14=The lowest price traded over previous 14 days.</span></p><p><span style="font-family: inherit; font-size: medium;">H14=The highest price traded over previous 14 days.</span></p><p><span style="font-family: inherit; font-size: medium;">%K=Value of stochastic.</span></p><p><span style="font-family: inherit; font-size: medium;">Stochastic compares the recent close to high & low values of stock over last 14 days.</span></p><p><span style="font-family: inherit; font-size: medium;">The basic principle behind stochastic is that, when market is in uptrend, the prices will close near the high & when the market is in downtrend the prices will close near the low.</span></p><p><span style="font-family: inherit; font-size: medium;">According to James Lane,the originator of stochastic oscillator, stochastic is momentum indicator.It means it changes the direction before price reversal.The oversold & overbought condition indicates the saturation level that the stock price is going to change the direction.</span></p><p><span style="font-family: inherit; font-size: medium;"><b>Relative strength index( RSI)-</b></span></p><p><span style="font-family: inherit; font-size: medium;">RSI is also a momentum indicator.Its formula is- </span></p><p><span style="font-family: inherit; font-size: medium;">RSI=100- 100/1+ RS</span></p><p><span style="font-family: inherit; font-size: medium;">Where,</span></p><p><span style="font-family: inherit; font-size: medium;">RS=average gain/ average loss</span></p><p><span style="font-family: inherit; font-size: medium;">Avg.gain is the % of average of gains (white candles) & avg.loss is the % of average of losses(black candles).</span></p><p><span style="font-family: inherit; font-size: medium;">Stochastic compares recent close with high & low over 14-periods, while RSI calculates magnitude of strength.</span></p><p><span style="font-family: inherit; font-size: medium;"><b>Stochastic RSI- </b></span></p><p><span style="font-family: inherit; font-size: medium;">This indicator is developed by Tushar Chande & Stanely Kroll, written in the book 'The new technical trader'.</span></p><p><span style="font-family: inherit; font-size: medium;">As name implies,stochRSI is combination of both stochastic & RSI.</span></p><p><span style="font-family: inherit; font-size: medium;">First of all, values of RSI are calculated over 14-day period.These values of RSI are then put into the formula of stochastic.</span></p><p><span style="font-family: inherit; font-size: medium;">The formula of stochRSI is as below,</span></p><p><span style="font-family: inherit; font-size: medium;">StochRSI =</span></p><p><span style="font-family: inherit; font-size: medium;"> RSI-RSI(MIN) /RSI(MAX)-RSI(MIN)</span></p><p><span style="font-family: inherit; font-size: medium;">Where,</span></p><p><span style="font-family: inherit; font-size: medium;">RSI- Recent RSI value.</span></p><p><span style="font-family: inherit; font-size: medium;">RSI(MAX)- Highest RSI value over 14-period.</span></p><p><span style="font-family: inherit; font-size: medium;">RSI(MIN)-Lowest RSI value over 14-period.</span></p><p><span style="font-family: inherit; font-size: medium;">Actually RSI is derived from stock prices & stochRSI is derived from RSI.So stochRSI is called derivative of derivative or indicator of an indicator.</span></p><p><span style="font-family: inherit; font-size: medium;">As it is derived from both momentum indicators,it is more sensitive & may produce more overbought & oversold conditions but whipsaws also.So proper care should be taken while using stochRSI.</span></p><p><span style="font-family: inherit; font-size: medium;">While using stochastic or RSI,many a times confusion may occur when stochastic or RSI remains in overbought or oversold condition over a prolonged time.The arrangement of stochRSI is to reduce these confusion in the mind of traders.</span></p><p><span style="font-family: inherit; font-size: medium;"><b>Oversold & overbought condition-</b></span></p><p><span style="font-family: inherit; font-size: medium;">StochRSI value varies between 0 to 1 or you may take it from 0 to 100 by taking the percentage.</span></p><p><span style="font-family: inherit; font-size: medium;">When stochRSI value reaches .2(or 20), it is assumed that the oversold condition is reached.When stochRSI value reaches .8(or 80) it is treated as overbought condition.</span></p><p><span style="font-family: inherit; font-size: medium;">StochRSI create more overbought & oversold conditions & that's why risky to trade.The solution for this is to take simple moving average of stochRSI over 10-periods.</span></p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjDG4Ci8WSmOlvLrqev9bEsMtWNKk3hSf8_c0gRsS1Gqlyy7CpGaYwe7BDpWFvvd1c3SF4XAepGNhfplxNMwj5bi0K2HGhouohNXyyioISdu1Eie0DFuBBvVy24NH78UC-XhN0Ez2dR3CQ/s2509/PicsArt_04-27-02.51.18.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1411" data-original-width="2509" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjDG4Ci8WSmOlvLrqev9bEsMtWNKk3hSf8_c0gRsS1Gqlyy7CpGaYwe7BDpWFvvd1c3SF4XAepGNhfplxNMwj5bi0K2HGhouohNXyyioISdu1Eie0DFuBBvVy24NH78UC-XhN0Ez2dR3CQ/s320/PicsArt_04-27-02.51.18.jpg" width="320" /></a></div><br /><ul style="text-align: left;"><li><span style="font-family: inherit; font-size: medium;">StochRSI gives more opportunity to trade</span></li></ul><p></p><p><span style="font-family: inherit; font-size: medium;"><br /></span></p><p><span style="font-family: inherit; font-size: medium;">From the above figure you might understand you can take trade with stochRSI when other indicators don't give any signal.</span></p><p><span style="font-family: inherit; font-size: medium;">When stochRSI crosses 50 & moves upward you may take a short term trade which RSI don't show.</span></p><p><span style="font-family: inherit; font-size: medium;">Stock is trending in upward direction & RSI is in overbought region but still stochRSI is giving opportunity to trade.</span></p><p><span style="font-family: inherit; font-size: medium;"><b><br /></b></span></p><p><span style="font-family: inherit; font-size: medium;"><b><br /></b></span></p><p><span style="font-family: inherit; font-size: medium;"><br /></span></p><p><span style="font-family: inherit; font-size: medium;"><br /></span></p><p><span style="font-family: inherit; font-size: medium;"><br /></span></p><p><span style="font-size: medium;"><b><br /></b></span></p>Avinash Bongardehttp://www.blogger.com/profile/11492605773113022410noreply@blogger.com0tag:blogger.com,1999:blog-2975533349952636465.post-7295215585856076402020-07-18T19:18:00.000+05:302020-07-18T19:18:28.777+05:30Double candlestick patterns part -2 -swing trading strategy <div dir="ltr" style="text-align: left;" trbidi="on">
Double candlestick patterns confirms the trend reversal & that reversal is going to sustain over a period of time. These patterns may appear everywhere in the chart which may be false signals.But if these patterns appear at overbought or oversold levels trend change may be confirmed.<br />
<b>Tweezers bottom -</b><br />
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEinzRPiMJ_pci0KrBDBdmLQKWCk3RqVwLIJRtPE9FTWxHqvE8MG1B83in-9svR8lVMF-Z1mfR-HA5p0hX7UCF1MupwMr5sGvmC0l6veJrgRDiaJKKxjECvCIFsUj6sdkf-qd_jBeCcDoG8/s1600/PicsArt_07-16-03.52.05.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="187" data-original-width="207" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEinzRPiMJ_pci0KrBDBdmLQKWCk3RqVwLIJRtPE9FTWxHqvE8MG1B83in-9svR8lVMF-Z1mfR-HA5p0hX7UCF1MupwMr5sGvmC0l6veJrgRDiaJKKxjECvCIFsUj6sdkf-qd_jBeCcDoG8/s1600/PicsArt_07-16-03.52.05.jpg" /></a></b></div>
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This candlestick pattern comes at the end of uptrend & confirms the bearish trend reversal.<br />
This is couple of candles which are same but first candle is green & second candle is red.<br />
It may be couple of shooting star as shown above. The first candle is green having small body & long tail. The second candle is red shooting star having small body & long tail.<br />
The condition for tweezers bottom is that, high of both the candles should be either equal or high of second candle should be less than the first candle. The second candle may open gap-up & close above the open price of first candle.<br />
Necessarily, it is not required that the candles should be shooting star. It may be couple of spining top, marubozu or doji. The condition is same. The first candle should be green & the second candle should be red. The high of both the candles should be equal or the high of second candle should be less than the first.<br />
If such a pattern appears at overbought level, it may be the beginning of downtrend.<br />
<b>Tweezers top-</b><br />
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjm5KvL2bgX3jdqXRz0Y5pHfZp7lYnCHd6XbZzrQdj4WZYMV666rtb3LKaRdU3MuFBVUyvHEOm0DWEWR6w46uaaNjCxDugz6XUM5aBP8TAru2yO4xemYg3rXKmbjdi8bWahgNC0tTnKMl4/s1600/PicsArt_07-16-03.47.01.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="161" data-original-width="207" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjm5KvL2bgX3jdqXRz0Y5pHfZp7lYnCHd6XbZzrQdj4WZYMV666rtb3LKaRdU3MuFBVUyvHEOm0DWEWR6w46uaaNjCxDugz6XUM5aBP8TAru2yO4xemYg3rXKmbjdi8bWahgNC0tTnKMl4/s1600/PicsArt_07-16-03.47.01.jpg" /></a></b></div>
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This is opposite of tweezers bottom. It comes at the end of downtrend confirming bullish trend reversal.<br />
The first candle is bearish (red). The second candle is green. The low of both the candles should be equal or the low of second candle should be little higher than the first candle that means within the low of first candle.<br />
The body of second candle may open gap-down or may close above the opening of first candle.<br />
It is not necessary that the candle should be hammer. It may be shining top, marubozu or doji. The condition is that the low of both the candles should be equal or low of second candle should not be below the first candle & the first candle should be red & second candle should be green.<br />
Both the candles collectively shows the war between buyers & sellers. Sellers are dominating in the first candle but buyers succeed in the second candle to make the candle green & not letting the sellers to drag the low price lower than the low of first candle.<br />
<b>Bullish kicker-</b><br />
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This candlestick pattern comes at the end of downtrend. The first candle in this pattern is long bearish(red) candle. The second candle is bullish (green) & opens totally out of the body of the first candle. The opening of second candle may be at the opening of first candle or above.<br />
If such a pattern appears at oversold level, it clearly indicates the bullish trend reversal.<br />
Such a huge gap-up opening occurs due to buyers confusions to enter into the trade. Sellers drag the price to a value which is unworthy. May be any good news about the particular stock on that day or market being abruptly bullish due to certain conditions such a phenomenon occur.<br />
<b>Bearish kicker-</b><br />
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgydWMGBPyxWc5fAZcs9yUhGIySnkbK6LgxYaTT9ilUrLvt-q66ZzSYnY7qto_E1HIfbuq6tyXeqXYzYi5EMGacGUfSGPEGB4RSCDlkh98WPAa5-49jBQEWcE4dv6WmgKm0NTfbloNy9GU/s1600/PicsArt_07-18-07.06.51.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="135" data-original-width="116" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgydWMGBPyxWc5fAZcs9yUhGIySnkbK6LgxYaTT9ilUrLvt-q66ZzSYnY7qto_E1HIfbuq6tyXeqXYzYi5EMGacGUfSGPEGB4RSCDlkh98WPAa5-49jBQEWcE4dv6WmgKm0NTfbloNy9GU/s320/PicsArt_07-18-07.06.51.jpg" width="274" /></a></b></div>
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This pattern appears at the end of uptrend. The long bullish candle (green) occur at the end of ongoing bullish trend. Buyers don't agree with this price. The next day the candle opens gap-down. The opening of next candle is below the opening of first candle, thus totally out of the body of first candle. Such a huge gap-down open is called kicker & that is totally in the opposite direction.<br />
If such a pattern appears at overbought level it indicates strong downtrend which is going to prevail over a period of time.<br />
<b>Piercing line pattern</b>-<br />
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It indicates bullish trend reversal.<br />
This double candlestick pattern comes at the end of downtrend. At the end of downtrend a long bearish candle (red) occur due to high selling pressure. The second candle opens gap-down reflecting the sellers intention to drag the price still lower. But buyers deny this price & pull the stock price upward.<br />
The close price of second candle should be between half of the first candle & below the opening of first candle.<br />
The high of second candle should not be lower than the high of the first candle.<br />
If such a pattern appears at the oversold level the possibility of bullish trend reversal increases.<br />
<b>Dark cloud pattern-</b><br />
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This pattern indicates bearish trend reversal.<br />
It comes at the end of uptrend. When a prominent uptrend occur, at the end of uptrend a long bullish (green) candle occur. It may be green marubozu. The second candle opens gap-up clearly indicating the buyers intention to pull the price still upward. But sellers deny the price & the buyers which are holding the stock over a uptrend sells the stock. This selling pressure drag the price below & closes the stock below the midpoint & above the opening price of first candle.<br />
The condition for dark cloud pattern is, the low of second candle should be above the low of first candle.<br />
If such a pattern appears at overbought level & the volume of the second candle is more than the first candle a bearish trend reversal is possible.<br />
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Avinash Bongardehttp://www.blogger.com/profile/11492605773113022410noreply@blogger.com0tag:blogger.com,1999:blog-2975533349952636465.post-55857365413927620672020-07-16T14:55:00.001+05:302020-07-16T14:55:11.522+05:30Double candlestick patterns part 1- swing trading strategy <div dir="ltr" style="text-align: left;" trbidi="on">
Patterns formed by two candles are called double candlestick patterns. Double candlestick patterns are useful for swing trading. If these patterns are coupled with oversold or overbought conditions of leading indicator more approximate swing trading techniques can be developed.<br />
There are many types of double candlestick patterns. Let's study some frequently occurring patterns.<br />
<b>Bullish engulfing pattern-</b><br />
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As the name implies, bullish candle completely engulfs the preceding bearish candle.<br />
The first candle is small & red. The second candle is green. The second candle opens gap-down that means open price of second candle is below the close price of previous red candle. Then the second candle closes above the open price of previous red candle. This green candle completely engulfs the previous red candle.<br />
Bullish engulfing pattern if comes after a downtrend implies the downtrend is coming to an end & bullish trend may start.<br />
If we couple this pattern with oversold level of leading indicator then it's a good opportunity for swing trading. If bullish engulfing pattern occurs when stochastic or RSI is at oversold level, it's time for entry (buy).<br />
Following chart explain the same theory.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiGpbJaTn7Az34_tHDZSiar6B-1gQ9LHm4OGPhXo70EGOyR8aOtW4KtDHFaKF5b0Hsjk6sG_XPBINyhqMyXE4oxzqo-t5EMuCo81KcRGpbn61QYe1NEL5bSl4SruLEpCeVdYU94oHDHVYc/s1600/PicsArt_07-15-12.00.23.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="270" data-original-width="859" height="125" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiGpbJaTn7Az34_tHDZSiar6B-1gQ9LHm4OGPhXo70EGOyR8aOtW4KtDHFaKF5b0Hsjk6sG_XPBINyhqMyXE4oxzqo-t5EMuCo81KcRGpbn61QYe1NEL5bSl4SruLEpCeVdYU94oHDHVYc/s400/PicsArt_07-15-12.00.23.png" width="400" /></a></div>
The above chart of jk tyre shows hammer at vertical line when stochastic is below 20-level.The preceding candle is small red candle & the next candle at vertical line is green hammer which is totally engulfing the red candle. This is the perfect example of bullish engulfing candlestick pattern where stochastic is oversold. See the rally right to vertical line.<br />
Hammer itself is trend-changer candle at oversold level. It shows more buyers are entering at this level & pulling the stock price upward resulting in a long tail. Trend-changer candle at oversold level shows bullishness & if it is engulfing the preceding red candle it's bullish trend reversal.<br />
'Buy' the next day when bullish engulfing candle appears & 'sell' when both stochastic lines intersects each other.<br />
<b>Bearish engulfing pattern-</b><br />
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiB__TPozzJacDf5bE16-S1Ae231RnB-MzvDawRvo8Eqa8BF6E-INUwYwgs2zDa9DvNgu4DaIzbpk-fVB78F8uerCzy_xsJr-ojQNKvkC-XDkKJrJU_-5jcoYEsU7sZlisSrcVekzQGiGU/s1600/PicsArt_07-14-09.53.25.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="80" data-original-width="112" height="285" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiB__TPozzJacDf5bE16-S1Ae231RnB-MzvDawRvo8Eqa8BF6E-INUwYwgs2zDa9DvNgu4DaIzbpk-fVB78F8uerCzy_xsJr-ojQNKvkC-XDkKJrJU_-5jcoYEsU7sZlisSrcVekzQGiGU/s400/PicsArt_07-14-09.53.25.jpg" width="400" /></a></b></div>
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In this type the first candle is green. The second candle is red which completely engulfs the green candle.<br />
The first candle is small & green. The second candle is red with gap-up open, that means it's open price is up than the previous close. But candle being red closes below the open price of previous candle, this engulfs the previous candle.<br />
If such a pattern occurs at overbought level the chance of trend-reversal that is downtrend is more.<br />
If stochastic is at 80-level or RSI at 70-level & bearish engulfing pattern occurs, downtrend may occur which opportunity for entry (sell).<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhObmi8_o8ohdec0zWyq6xT6-PjuV7tKTjlbO_udkaZWGm711m3NOaFQ-PxKNcvV1GvYvLmpH3xinPBt65_ohf2-xMg0hb8zAAZfRgUSkeoPyYCy5Cqz6DDlr6ibJdlOjzXdHhccAh5EgY/s1600/PicsArt_07-15-12.19.57.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="290" data-original-width="878" height="131" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhObmi8_o8ohdec0zWyq6xT6-PjuV7tKTjlbO_udkaZWGm711m3NOaFQ-PxKNcvV1GvYvLmpH3xinPBt65_ohf2-xMg0hb8zAAZfRgUSkeoPyYCy5Cqz6DDlr6ibJdlOjzXdHhccAh5EgY/s400/PicsArt_07-15-12.19.57.png" width="400" /></a></div>
The above chart of Adani ent shows bearish engulfing pattern at overbought level.<br />
The candle left to vertical line is small & green. The next candle at vertical line is red marubozu which totally engulfs the preceding green candle. This phenomenon occurring at overbought level is sign of bearish trend reversal. See to the right of vertical line downtrend prevailed over certain period.<br />
'Sell' the next day when bearish engulfing pattern appears at overbought level, ' buy' when both stochastic lines intersects each other.<br />
If you look to the left of vertical line a prominent shooting star is appearing. Actually it's a trend-changer candle at overbought level. But if you see left of this candle, it is red candle which is totally engulfed by green shooting star. This is sign of bullish engulfing pattern, but it has no meaning because this phenomenon is occurring at overbought level & not at oversold level.<br />
<b>Bullish harami-</b><br />
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjj_XcXHdXTGG76QGhRUKjClwBBPIFneA6hdjeXmeGKIOqGqUgjQlxLi8tvOhuJdYOYtWRMxobffZ6z1AH213NRlhCzkJW5racQz3nnKDIWkt8iSfa3VNJUmAcSvRsqCOZBujQS4D6WiS8/s1600/PicsArt_07-15-05.50.10.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="83" data-original-width="107" height="248" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjj_XcXHdXTGG76QGhRUKjClwBBPIFneA6hdjeXmeGKIOqGqUgjQlxLi8tvOhuJdYOYtWRMxobffZ6z1AH213NRlhCzkJW5racQz3nnKDIWkt8iSfa3VNJUmAcSvRsqCOZBujQS4D6WiS8/s320/PicsArt_07-15-05.50.10.jpg" width="320" /></a></b></div>
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Harami is Japanese word meaning 'pregnant woman'.<br />
The first candle in this pattern is long bearish that is long red candle. The second candle is small & green which is totally inside the first candle. Ideally the second candle is gap-up open that means the open price of second candle is above the previous close & the close price is below the opening price of previous candle.<br />
If the second candle is trend-changer candle (hammer, spining top, green marubozu) the trend-change is prominent.<br />
If such a candlestick pattern occurs at oversold level it's bullish trend reversal, which is opportunity for swing trading.<br />
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If you observe the above chart of Sunpharma bullish harami candlestick pattern can be observed.<br />
The preceding candle to vertical line is red marubozu. The candle at vertical line is green marubozu which is completely inside the red candle.<br />
If you look below in stochastic chart, stochastic is touching 20-level which is oversold level of stochastic. This is the ideal condition for swing trading.<br />
If bullish harami is occurring at oversold level it's sign of bullish trend reversal.<br />
See to the right of vertical line, a good rally of 10-15% occurred in a month.<br />
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When bullish harami occurs at oversold level, make entry(buy) the next day. Wait stochastic to enter into overbought level. You may exit(sell) when both stochastic lines intersects each other & a trend-changer candle (hanging man) appeared. You might have gained 5-7% in 6-7 trading days. </div>
<b>Bearish harami-</b><br />
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhEMrMt73bxPKeLRZLueOwc4M0TbgLFpb6uQZHONblMRsQt7u7XzaV_N_7-_w6w1QfeiuGDLeUc1eOiJHrrazzx2bsPxFwfQlALum7BdfiFfaWkvHbAkToxsXHeedRK92D9uKkXKq6rpmQ/s1600/PicsArt_07-15-05.47.24.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="83" data-original-width="91" height="291" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhEMrMt73bxPKeLRZLueOwc4M0TbgLFpb6uQZHONblMRsQt7u7XzaV_N_7-_w6w1QfeiuGDLeUc1eOiJHrrazzx2bsPxFwfQlALum7BdfiFfaWkvHbAkToxsXHeedRK92D9uKkXKq6rpmQ/s320/PicsArt_07-15-05.47.24.jpg" width="320" /></a></b></div>
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This is opposite to bullish harami. In this type of pattern the first candle is long bullish that is green candle. The second candle is red & within the body of first candle.<br />
Ideally the second candle is gap-down opening that means the open price of second candle is lower than the previous close & close is inside the open price of first candle. The second body is totally embed in first body.<br />
If second candle is trend-changer candle (hanging man, spining top, red marubozu) the possibility of trend change is more.<br />
If such a pattern at overbought level it's a sign of bearish trend reversal.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNV5D2EIO7idSFsgMzm_NDTaZioS1diFsiiEXBYw4DkJIcEujFhyphenhyphenoTTSlPR1Uiwq_XBFT55l5yxs69kQXFsNenjc9vYa4wUm9jSq_HFm3NTyioKxb62_CWyVjVvwTRkX7N7x65zVJ0Xps/s1600/PicsArt_07-15-08.11.56.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="282" data-original-width="852" height="105" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNV5D2EIO7idSFsgMzm_NDTaZioS1diFsiiEXBYw4DkJIcEujFhyphenhyphenoTTSlPR1Uiwq_XBFT55l5yxs69kQXFsNenjc9vYa4wUm9jSq_HFm3NTyioKxb62_CWyVjVvwTRkX7N7x65zVJ0Xps/s320/PicsArt_07-15-08.11.56.png" width="320" /></a></div>
The above chart of Dabur India ltd. Shows bearish harami at vertical line.<br />
The candle left to vertical line is green marubozu. The second candle is red, open & close of which are inside the green marubozu. This second candle is a shooting star occurring at overbought level may change the trend.<br />
Look below in the stochastic chart. It is overbought at vertical line. The ultimate result is downtrend occurred.<br />
When bearish harami occur at overbought level make entry(sell).Wait either to fall stochastic to oversold level or a bullish trend-changer candle near oversold level. In this case red gravestone doji appearing in the chart when stochastic is near 20-level.You may exit(buy) here. </div>
Avinash Bongardehttp://www.blogger.com/profile/11492605773113022410noreply@blogger.com0tag:blogger.com,1999:blog-2975533349952636465.post-56562668193755359692020-06-24T22:12:00.002+05:302020-06-24T23:13:47.286+05:30Intraday trading strategy - candlestick coupled with bollinger band part -1<div dir="ltr" style="text-align: left;" trbidi="on">
Bollinger band is formed by 20-day SMA(or EMA) line & two lines above & below taking 2-standard deviation of SMA (or EMA) line.<br />
Most of the times stock price remains within the bollinger band. When stock is in strong bullish trend or bearish trend stock price may sustain above or below the band for a definite time period.Most of the times stock price remains inside the band.<br />
When stock becomes saturated in a particular direction (uptrend or downtrend) price touches the upper or lower bollinger band line,indicating trend change may happen.<br />
If at this stage a distinct candle (trend-changer candle) appears, it may signal trend reversal in advance.<br />
Candles showing indecision in trader or driven one sided either by buyers or sellers may predict trend change before it actually happens.<br />
If trend-changer candle is totally out of band the chances of trend change is more. Even if candle touches or intersect the upper or lower band, trend change may occur.<br />
<b>Spining top coupled with bollinger band - </b><br />
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj-x-5Baj3ck61vUJov6HxGJD4ZyE_ETzHCefWvI9V8-lS_pQdEaa2rcVh32Rd0zJ21DkZWPYyZ8yp9EHirJgn7hR2hzhDdRFUIa8n6XMhcokgV-75mAePqYovYkpPD75ct12fK2OMOCSI/s1600/PicsArt_06-24-12.42.18.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="302" data-original-width="832" height="116" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj-x-5Baj3ck61vUJov6HxGJD4ZyE_ETzHCefWvI9V8-lS_pQdEaa2rcVh32Rd0zJ21DkZWPYyZ8yp9EHirJgn7hR2hzhDdRFUIa8n6XMhcokgV-75mAePqYovYkpPD75ct12fK2OMOCSI/s320/PicsArt_06-24-12.42.18.png" width="320" /></a></b></div>
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If you observe the above chart of Sunpharma mar-2019 spining top appearing at the vertical line. More than half of a candle body is out of upper band line & see the next candle it is green, showing trend change at least for one candle.<br />
Starting from left of the chart spining top & shooting star appeared within the band but no trend change occurs.<br />
The stock shows saturation level at the vertical line & trend change is predicted by spining top showing indecision in traders. The result is next candle is red.<br />
If you look to the right of vertical line a small green marubozu touching the upper bollinger band line is still making a trend reversal for a single candle.<br />
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Observe above chart of jk tyre feb-2018 showing spining top at the end of downtrend. The spining top appearing at the vertical line is partially below the band. It shows the small downtrend coming to an end & at least next candle is going to be green.<br />
Looking at the left side of the chart stock is showing sideways movement. It can be understood by small candles & small tails.<br />
Once again, if you see to the right of vertical line green marubozu intersecting the upper bollinger band & changing the trend.<br />
After that downtrend prevailed touching the candles to lower bollinger band but no trend change occured due to absence of trend-changer candle hence continues the trend.<br />
<b>Inverted hammer coupled with bollinger band -</b><br />
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Inverted hammer indicates buying pressure created by buyers to stop the downtrend. If it occurs at the saturated level the ongoing trend comes to an end.<br />
This can be well observed by the chart above of Sunpharma jan-2019.If you see previous candle to vertical line it's long red candle with tail. It does mean sellers dragged the stock price too much but buyers entered & made the candle little bit small. The red candle crossed the lower band line & the next candle is green showing inverted hammer. This inverted hammer appeared totally below the lower band line & predicted the firm trend change. See the next candle. It is gap-up opening & green marubozu.<br />
The middle line(20-day SMA line) may be taken into account to trade. Look the third candle to the right of vertical line. It is spining top touching the middle line & again trend reversal.<br />
<b>Shooting star coupled with bollinger band-</b><br />
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Shooting<b> </b>star denotes the sellers are creating resistance to price & want to reverse the trend. If such a situation takes place at the upper band trend change may be seen.<br />
The above figure of Grasim industries ltd. June-2017 shows shooting star at the vertical line.<br />
The steady uptrend is seen first of all in the chart. Some candles are out of band but unable to bring trend change. But at the vertical line a prominent shooting star appeared which is totally out of upper bollinger band line.If trend-changer candle appears totally out of bollinger band it's a firm sign that trend change may take place.<br />
See the next candle,it is red.<br />
<b>Dragonfly doji coupled with bollinger band</b> -<br />
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The above chart of Infosys ltd. Nov-2018 shows dragonfly doji at the vertical line.<br />
Dragonfly doji shows no or little body & longer tail. It shows the fight between sellers & buyers ending in a tie. The body at the upper end indicates uptrend, though it may appear at the upper end.<br />
To the left of above chart we see a downtrend prevailing over a period & all the bodies being red. At the vertical line dragonfly doji appeared having body inside but a tail out of lower band line.It created a trend change,next candle being green.<br />
Candlestick is the face of market. Just by face expression we understand what a front person want to say. Just by observing candlestick we can understand where the market is going to be headed. For this we should observe number of candlestick charts.<br />
So, how to trade? Let's discuss that at the end of next article.<br />
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Avinash Bongardehttp://www.blogger.com/profile/11492605773113022410noreply@blogger.com0tag:blogger.com,1999:blog-2975533349952636465.post-84292148020812350242020-06-23T19:34:00.001+05:302020-06-24T23:14:43.256+05:30Intraday trading strategy - candlestick coupled with RSI -part-2<div dir="ltr" style="text-align: left;" trbidi="on">
<b>Gravestone doji coupled with RSI -</b><br />
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Gravestone<b> </b>doji coming at the end of uptrend reflects buyers still wanting to push the stock price upward but sellers deny the value.The selling pressure results in long tail & no or small body compared to tail.<br />
If this situation occurs at overbought region the trend change may occur.<br />
Above figure is example of that. The graph of Mindtree jan-2016 clearly depicts the theory. It shows gravestone doji at vertical line in the price chart & overbought level of RSI.<br />
Initially if you look to the left of the chart candles are small,indicating not a major trend or reversal will happen for a certain period. Then a small downtrend of three candles is seen. After that a upward movement can be observed when RSI is seen at oversold region.<br />
When RSI reaches near overbought level shown at vertical line, a gravestone doji appeared in price chart.<br />
Buyers still want to drive the stock upward hence more pre-open buying occurs resulting in gap-up opening of the stock. See the next candle to vertical line. It opened gap-up but couldn't result in green. It's a prominent red candle.<br />
<b>Hammer coupled with RSI -</b><br />
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Hammer<b> </b>indicates<b> </b>bullish signal. If it comes at the end of downtrend when RSI is oversold the signal is more confirming, when number of sellers increase at a particular time buyers comes into play & makes resistance to fall the price more. Buying raises the stock price making a tail longer than the body.<br />
Hammer can be red or green.<br />
The above figure of State bank of India mar-2020 shows the same story.<br />
At left end of the chart, we see a downtrend is occurring & then a firm red marubozu occurred. This is the time of confusion.<br />
Purposely I am giving this example to tell that overbought or oversold condition sustained over a time should be avoided to trade. You may see RSI is showing oversold for more than four candles. So such situation should be avoided to trade. You may couple trend-changer candle with freshly generated oversold or overbought levels.<br />
Next to red marubozu hammer occurred & next candle is green.<br />
<b>Hanging man coupled with RSI -</b><br />
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Hanging<b> </b>man represents sellers intention to deny the price & more selling occurs. Buyers comes at this stage to increase the stock price resulting in long tail & short body. If such a situation occurs at overbought level trend-change is possible.<br />
The chart of pharma company Granules India ltd. depicts the exact situation making hanging man at overbought level & trend change.<br />
Initially to the left we see sideways movement of the stock then a sudden uptrend driving RSI to overbought level. At the same time hanging man appeared. Hanging man (trend-changer candle) at overbought level changes the trend. See the next candle to vertical line in price chart. It is prominent red.<br />
Hanging man should be red or green.<br />
Care should be taken that the candle should open gap-up. It indicates firm trend-change.<br />
<b>Marubozu coupled with RSI -</b><br />
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Ideally marubozu has no tails but practically small tails on both the sides in real charts. Marubozu indicates absence of buyers or sellers & market is totally driven by either buyers or sellers single handed & opponents are keeping away from the market. If such a situation occurs at overbought or oversold levels trend change may take place at least for one candle.<br />
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The above chart of Bharat airtel ltd. mar-2020 shows red marubozu at oversold level of RSI.<br />
Before that stock is in sideways movement over a long period. After that sellers drag the stock price to oversold level. Here it is to be observed when a red marubozu occurred stock is oversold, still it couldn't change the trend. Again one comparatively smaller red marubozu occurred. Here RSI entered into oversold region & trend change occured.Looking at vertical line you may see next candle is green. If you could not get some trades in your favour it doesn't mean theory is wrong. No system is perfect & nobody is perfect trader around the world. This theory is more suitable when stock is in sideways movement that is oscillating between support & resistance level.<br />
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The above chart of Dabur India ltd. June-2016 shows green marubozu at overbought levelof RSI,showing trend change.<br />
The RSI gained abrupt overbought level in just two green marubozu candles. When the small green marubozu occurred in price chart at the same time RSI reached the overbought level. Touching RSI to overbought level & marubozu at the same time brought trend change. See the next candle to vertical line, it's red candle.<br />
Again, if you see to the right side in the chart small candles can be seen. It shows neither buyers nor sellers are interested in the stock. When a prominent red marubozu appears near overbought level, the next candle is redindicating what so ever trend(uptrend) was progressing has changed at least for one candle.<br />
So what should be the strategy?<br />
1.Don't trade in overbought or oversold conditions which are continuing over a long period. The stocks making fresh oversold or overbought conditions coupled with candlestick should be selected.<br />
2. If the RSI is overbought & trend-changer candle appears<br />
a. Sell pre-open, that means sell the stock before market opens the next day.<br />
b. Buy before market closes, making both trades in a single day.<br />
3.If RSI is oversold & trend-changer candle appears<br />
a. Buy pre-open.<br />
b. Sell before market closes.<br />
Apply stop-loss if you are not comfortable.<br />
Don't trade in between the range 30-70.<br />
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Avinash Bongardehttp://www.blogger.com/profile/11492605773113022410noreply@blogger.com0tag:blogger.com,1999:blog-2975533349952636465.post-65030308362759015922020-06-21T22:11:00.000+05:302020-06-24T23:15:31.343+05:30Intraday trading strategy - candlestick coupled with RSI - part 1<div dir="ltr" style="text-align: left;" trbidi="on">
Leading indicators produce overbought & oversold conditions.If these conditions used with trend-changer candlestick more approximate buy & sell signals may be generated.<br />
Overbought & oversold condition indicates a particular stock under observation has reached the saturation level & trend change may occur. If this condition is coupled with particular candle, trader may get better results of trend change & opportunity to trade.<br />
Let's couple different candles with RSI & search the opportunities to trade.<br />
Relative strength index (RSI) used in all these examples is 14-day RSI. 30-level is treated as oversold level & 70-level is treated as overbought level.<br />
<b>Spining top coupled with RSI-</b><br />
Spining top frequently occurs as a trend-changer candle at overbought & oversold condition. Indecision in trader, many a times brings trend-change.<br />
Spining top may be red or green & appear at both the ends, at the end of downtrend or uptrend.<br />
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If you observe the above chart spining top appeared at the time when RSI is overbought at vertical line.<br />
The figure is of jk-tyre june 2019. First of all at the left side of the chart sideways trend may be observed. Then a uptrend for 5 candles can be seen. Marubozu candle is followed by red spining top. At this stage RSI shows overbought condition.<br />
Overbought condition coupled with spining top (trend-changer candle) predicts trend change at least for the next candle. See the next candle to vertical line, it is red candle. This it proves the theory.<br />
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Above graph of Reliance industry june-2019 shows spining top after a downtrend.<br />
Look at the left, downtrend occurred. RSI came from overbought to oversold position. Just at near about 30-level red spining top appeared. Spining top at oversold condition predict trend change. Look the candle next to vertical line in price chart. It is green. This trend change occured at least for one candle.<br />
Before spining top a candle having small body & small tails appeared which indicates nothing.<br />
Spining top is firm indication of trend change if appears at overbought or oversold conditions.It is the traders indecision which is converted into trend change at this particular levels.<br />
<b>Inverted hammer coupled with RSI-</b><br />
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Inverted<b> </b>hammer<b> </b>indicates<b> </b>buyers are trying to increase the stock price buying more quantities but sellers are selling & draging the price below. In such situations body becomes small & tail longer. If such situation occur at oversold level trend change may take place.<br />
The above graph of Asian paint oct-2018 shows inverted hammer at oversold level.<br />
Previously, a downtrend occurring is seen by three distinct red candles draging RSI to oversold level. If you see middle red candle in this downtrend a middle red candle looks like spining top but unable to change the trend because RSI is not reached or near to oversold level.<br />
If you see at the vertical line, when exactly RSI touches 30-level inverted hammer appeared. It clearly indicates trend change, that is the next candle should be green & that is the case.<br />
Looking right to vertical line so many small candles are seen pulling RSI steadily to overbought level. If stock reaches to overbought & candles are having small bodies & tails, it should be avoided to trade. A prominent trend -changer candle should occur to trade.<br />
<b>Shooting star coupled with RSI-</b><br />
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEigPwInSlUzIa0hdJ7E-JXUcWbJSAc5AiW4f0SYQ4FkaW0M0a3k_mqLzI792Mww-ZRByRUu69Zn0zBVg8GRtDpjXEW1xvVvi8jrT45lHYG8kIFllTC79DGMYBuLv3Hrd7wHWMbusN58LyM/s1600/PicsArt_06-21-05.50.08.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="274" data-original-width="832" height="105" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEigPwInSlUzIa0hdJ7E-JXUcWbJSAc5AiW4f0SYQ4FkaW0M0a3k_mqLzI792Mww-ZRByRUu69Zn0zBVg8GRtDpjXEW1xvVvi8jrT45lHYG8kIFllTC79DGMYBuLv3Hrd7wHWMbusN58LyM/s320/PicsArt_06-21-05.50.08.png" width="320" /></a></b></div>
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When buyers try to increase stock price but sellers deny this price by selling. At this time a short body & long tail is created. If this happens at the overbought region it is the sign of trend reversal.<br />
Observing the above chart of Titan company june-2020 we see shooting star at vertical line.<br />
Before that a steady progress in stock over a time making steady progress in RSI from oversold to overbought level.<br />
When RSI just toutches 70-level shooting star appeared. Shooting star appearing at overbought level may change the trend & that is the case here. Look right to the vertical line it's a firm red candle.<br />
Due to the buyers intention to increase the stock price more pre-open buying happened resulting in gap-up opening but at last the candle occurred red.<br />
<b>Dragonfly doji coupled with RSI -</b><br />
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgDfInpL39W99Jwt6qTueXUfUhmAzTLbO0EX41tMame8dp3YXd7_ODJ3vwSidCUxK6gtdZyW-RRKiLFU3A-bbU2yKHRZdNk0PDZyRL6MpWDZRZTzOHOEFoiyMRlM5gUAVp5VL0Aj2qce5k/s1600/PicsArt_06-21-08.41.24.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="276" data-original-width="882" height="100" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgDfInpL39W99Jwt6qTueXUfUhmAzTLbO0EX41tMame8dp3YXd7_ODJ3vwSidCUxK6gtdZyW-RRKiLFU3A-bbU2yKHRZdNk0PDZyRL6MpWDZRZTzOHOEFoiyMRlM5gUAVp5VL0Aj2qce5k/s320/PicsArt_06-21-08.41.24.png" width="320" /></a></b></div>
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Dragonfly<b> </b>doji reflects sellers intention to drag the stock & downtrend more deep but number of buyers increases & pulls price upward making no or little change in open & close price of stock & longer tail.If dragonfly appears at oversold region the chances that trend change will occur is more.<br />
Just by visual inspection you may observe dragonfly doji in the above chart of Larson & turbo ltd june-2018.<br />
Before the vertical line drawn, a downtrend is in progress. When RSI is just below 30-level dragonfly doji appeared indicating trend change might occur. As RSI is in oversold region the trend change occured.You may see just right to vertical line, the candle is prominent green showing trend change for single candle.<br />
Left to vertical line red marubozu occurred & below that RSI is showing oversold. If you trade here as 'buy' for the next day, you may not gain more but won't lose the trade either. Only thing is to keep patience because after opening stock price decreased but again regained at the end of the day.<br />
So how to trade? Let's discuss that at the end of next article.<br />
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Avinash Bongardehttp://www.blogger.com/profile/11492605773113022410noreply@blogger.com0tag:blogger.com,1999:blog-2975533349952636465.post-60451985578695564452020-06-20T23:21:00.000+05:302020-07-05T13:58:24.712+05:30Intraday trading strategy - candlestick coupled with stochastic part-2<div dir="ltr" style="text-align: left;" trbidi="on">
<b>Gravestone doji coupled with stochastic -</b><br />
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhYPQu4SouTQ_-G3zIoCH5L0CHjuAJuwXRF4BzJ0mnWiQO0iTDosbfDYWe-ohwIfI5_FqjseXZesZk2IjZsnv2aTxuEyXJ1Eha5eLNY7dUEUsITafFPSqvj_NcOjskq9FEjlJPrb2KxToo/s1600/PicsArt_06-20-03.10.15.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="284" data-original-width="848" height="107" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhYPQu4SouTQ_-G3zIoCH5L0CHjuAJuwXRF4BzJ0mnWiQO0iTDosbfDYWe-ohwIfI5_FqjseXZesZk2IjZsnv2aTxuEyXJ1Eha5eLNY7dUEUsITafFPSqvj_NcOjskq9FEjlJPrb2KxToo/s320/PicsArt_06-20-03.10.15.png" width="320" /></a></b></div>
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The above chart shows gravestone doji at vertical line in price chart. The graph is of Apollo tyre sep-2016.</div>
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At the vertical line signal line is touching 80-level & stochastic line is near to 80-level(overbought level). If you see left to vertical line a small uptrend occurred & then gravestone doji appeared just slightly before stochastic becomes overbought. See the next candle to vertical line & it is prominent red. It proves,at overbought region gravestone doji appeared as trendchanger candle. </div>
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<b>Hammer coupled with stochastic -</b><br />
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiK-L20QoLi2M0BTeP3jlTSmUQBSJbaBSFveaLXLn-wiybRYa_ZeVfl-acIqD1a3dE2e1FzaQAH0iz49tYffHRYHPpGdfS4O_rUwuYQY-qZbTkMppqVmkvaa17W8BunS_rB8aNle-KHRaA/s1600/PicsArt_06-20-03.08.13.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="286" data-original-width="825" height="110" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiK-L20QoLi2M0BTeP3jlTSmUQBSJbaBSFveaLXLn-wiybRYa_ZeVfl-acIqD1a3dE2e1FzaQAH0iz49tYffHRYHPpGdfS4O_rUwuYQY-qZbTkMppqVmkvaa17W8BunS_rB8aNle-KHRaA/s320/PicsArt_06-20-03.08.13.png" width="320" /></a></b></div>
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In the above figure initially a small downtrend occurred & stochastic coming from overbought region to oversold region. Just near oversold level, signal line & stochastic line intersect each other. At the same time hammer appeared in the price chart. See the vertical line. If you observe the candle next to vertical line, it is prominently bullish. </div>
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If you look left to vertical line in price chart a white spining top appeared & then hammer appeared confirming bullish trend & yielding approximately 5% gain in a single day.<br />
<b>Hanging man coupled with stochastic </b><br />
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhMXTDmvn55uS4BLVdQDjlzxBeupmrcbVC7Iuikt5F3a5cYuflNn7I59p7Ak9wqAz243QxwNzPtcnN-HUhw9acwEPm5gHEEKSWx8-m82GT-D_qPNcw1bVnk76dkfLJblaRLuyBHkBJaFRA/s1600/PicsArt_06-20-11.01.02.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="278" data-original-width="855" height="104" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhMXTDmvn55uS4BLVdQDjlzxBeupmrcbVC7Iuikt5F3a5cYuflNn7I59p7Ak9wqAz243QxwNzPtcnN-HUhw9acwEPm5gHEEKSWx8-m82GT-D_qPNcw1bVnk76dkfLJblaRLuyBHkBJaFRA/s320/PicsArt_06-20-11.01.02.png" width="320" /></a></b></div>
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The above chart of State bank of India Apr-2015 shows hanging man in price chart.<br />
Before that stochastic came from oversold to overbought level in few candles. When signal line crosses 80-level,hanging man appeared. Stochastic line is near to 80-level.At this stage hanging man predicts the next candle should be red.<br />
If you look left in the chart the stochastic is in overbought level. If you see in price chart candles have small body & smaller tails. This is the indication that the stock is sideways.<br />
If you look to the right end, when stochastic is oversold marubozu candle is seen. It's open is above the previous close & at the same time stochastic & signal line are intersecting. This indicates next candle should be green.<br />
<b>Marubozu coupled with stochastic -</b><br />
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgKUqUsRHyBR_rJ-NwnPkvNXbYeRQdofcVVDjtJ07grVDHhO_EjN__v3R_YKYUS9iIomphL0Au6RK6YMXSU9hEfuewSbJ6D5DSCr-kDxFYHskTsA4NxG96ntd56y3ZP72HnGgVGTbqIuzU/s1600/PicsArt_06-20-10.58.23.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="318" data-original-width="805" height="126" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgKUqUsRHyBR_rJ-NwnPkvNXbYeRQdofcVVDjtJ07grVDHhO_EjN__v3R_YKYUS9iIomphL0Au6RK6YMXSU9hEfuewSbJ6D5DSCr-kDxFYHskTsA4NxG96ntd56y3ZP72HnGgVGTbqIuzU/s320/PicsArt_06-20-10.58.23.png" width="320" /></a></b></div>
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Ideally marubozu has no tails on either end but practically it may have small tails.<br />
Marubozu may be red or green & may appear at both the ends as trend-changer.Marubozu represents buying or selling only from one side means opponents are waiting for trend change.<br />
If you look at the above chart of Hindustan Unilever Aug-2019,red marubozu is occurring perfectly at the time when stochastic is overbought & signal line & stochastic line are interesting. The next candle is small but red again.<br />
If you look to the left in the chart dragonfly doji appeared near oversold region. Remember doji may not show sudden change. It indicates the ongoing trend (downtrend) is coming to end soon. The next candle again red marubozu & stochastic at 20 confirms next candle should be green & same is the case.<br />
At the right end of the chart again green marubozu after two small red marubozu signals the next candle should be green, when stochastic is oversold. Before that stochastic remained in oversold region for many candles & each candle is red.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEigDV_sESoug829cVTDjb-ga3J0RpcWt4Vchx-vDWpphyphenhyphenDGwXX3mdwTB4sN4xxQBoT0pp4jweaxm-lQyR4rowq7gLCGl82kqLi9nmb32UMs05rBZEQcbgkNXRcuaH1Fw-FRk69PEdayyPU/s1600/PicsArt_06-20-10.56.12.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="310" data-original-width="688" height="144" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEigDV_sESoug829cVTDjb-ga3J0RpcWt4Vchx-vDWpphyphenhyphenDGwXX3mdwTB4sN4xxQBoT0pp4jweaxm-lQyR4rowq7gLCGl82kqLi9nmb32UMs05rBZEQcbgkNXRcuaH1Fw-FRk69PEdayyPU/s320/PicsArt_06-20-10.56.12.png" width="320" /></a></div>
The above graph is perfect representation of marubozu as a trend-changer.This graph is of ICICI bank Aug-2020.<br />
If we view to the left of vertical line a downtrend is occurring & stochastic is falling from overbought to oversold condition. When just signal line running below the stochastic line touches 20-level & at the same time intersecting with stochastic line, firm green marubozu occurs. It indicates trend has changed & the next candle is green.<br />
If you view the right side to vertical line again it's prominent green marubozu occurring when stochastic is just above 20-level & signal line overlapping. The next candle is green again.<br />
<b>Interpretation-</b><br />
Candlestick<b> </b>may act as trend-changer candlestick under certain conditions & that condition may be overbought & oversold. You may add volume at that particular time & take decisions.<br />
To trade intraday, it is suggested to select the stock freshly entering into oversold or overbought condition. At this particular stage or near about these conditions, if trend changer candle appears the next candle may reverse of the preceding trend.<br />
If the candle body is small & tails are short at these levels, the stock might go into sideways. So trading in such a situation should be avoided.<br />
It is a matter of common sense to verify the candle. Ideally what we learn doesn't happen practically all the time. Candles having tails on both the sides equal to or bit less than the body may be treated as spining top. Marubozu may have small tail on one side or both. Hammer & inverted hammer may have little tail on the opposite side.<br />
Well friends,how many stocks you have in your watchlist?<br />
I have at least 50 stock in my watchlist. Make watchlist at least of 20-30 stocks, depending upon your daily leisure time. If you have PC it's better. On cellphone you may get stock price chart & below this select whichever indicator you want. Your broker provides this facility on his app.<br />
Select a stock, select any indicator you prefer & watch oversold & overbought condition. See whether stock is freshly entering into these regions with trend-changer candlestick. Repeat this till you get the stock satisfying these conditions. You won't require more than one hour to do this to get one stock a day.<br />
So friends, what should be the strategy for intraday.?<br />
<b>Intraday strategy-</b><br />
a. If the stock enters freshly in overbought condition & trend-changer candle appears then<br />
1.sell pre-open for the next day. Pre-open means before market opens next day.<br />
2.Buy the stock before market closes the next day.<br />
b. If the stock freshly enters oversold condition & trend-changer candle appears then<br />
1.Buy pre-open for the next day, before market opening the next day.<br />
2.Sell the stock before the market closes the next day.<br />
Less requirement that stop-loss loss is needed.<br />
This is the rough idea I am putting forward.You may improve if you want.<br />
So friends, how do you feel about my idea? Write to me on my email.<br />
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Avinash Bongardehttp://www.blogger.com/profile/11492605773113022410noreply@blogger.com0tag:blogger.com,1999:blog-2975533349952636465.post-78494563652354449112020-06-17T17:51:00.000+05:302020-06-24T23:16:53.052+05:30Intraday trading strategy - candlestick coupled with stochastic - part - 1<div dir="ltr" style="text-align: left;" trbidi="on">
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Candlestick depicts the mood & behaviour of market & traders. If candle shows long tails on both the sides it depicts confusion in traders,in which direction the stock is going to proceed, whether it will continue the ongoing trend or a trend reversal.<br />
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If candlestick is having longer tail on one side, it depicts buying or selling pressure more from one side. So here also we require to confirm the trend.</div>
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Sometimes candlestick may give false signals which also should be verified.</div>
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All these conditions can be reaffirmed by coupling candlestick with modern indicators. If candlestick coupled with Indicators it can give more accurate buy & sell signal (entry & exit).</div>
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So we will couple candlestick with one indicator at a time & see how buy & sell signals are created.</div>
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<b>Spining top coupled with stochastic -</b></div>
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This is more frequently occurring & reliable trend-changer candlestick when stochastic is overbought (80 or above) & oversold (20 or below) condition.</div>
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All the examples studied here are from real Indian stock market. It doesn't matter which stock market is, idea remains same everywhere.</div>
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The stochastic used in all the examples is 14-day stochastic.</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhuT51ae6VJErpTexPYzQfTzv2Kpq84KAG2nSWR2UfXbt5y_02NYHltxNBSEtyhzPchlqHZkOIiNC7jUSbbp8GfqGq94gOFlItRHMfxm_jshps3AWJQYpY4jXvSs6nxvmC1KwOUTg1Dupk/s1600/PicsArt_06-17-05.23.56.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="289" data-original-width="734" height="125" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhuT51ae6VJErpTexPYzQfTzv2Kpq84KAG2nSWR2UfXbt5y_02NYHltxNBSEtyhzPchlqHZkOIiNC7jUSbbp8GfqGq94gOFlItRHMfxm_jshps3AWJQYpY4jXvSs6nxvmC1KwOUTg1Dupk/s320/PicsArt_06-17-05.23.56.png" width="320" /></a></div>
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The above graph is of Titan company dec-2018.</div>
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Observe the graph. Look at the vertical line. The stochastic is in overbought condition.look above in the price chart. Spining top is just above when stochastic is overbought.</div>
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If stochastic is in overbought region & spining top (trend-changer candlestick) is appearing at the same time it indicates trend change. It indicates the uptrend has come to an end or if not trend is going to correct at least for one candle. Hence the next candle should be black(red).</div>
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Spining top may be red or green & appear at both the ends.</div>
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If the candle opens above the previous close & stochastic is 80 or above the possibility that the next candle is going to be red is more.</div>
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The next candle to vertical line appearing red. It confirms when stochastic is overbought & spining top appears the next candle may be red.</div>
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But again, observe the same candle, it is a spining top. But it opens below the previous close & red. Next to this candle a small green candle.</div>
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Try to understand what is trendchanger candle. It has nothing to do with ongoing trend.</div>
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Observe so many candlestick charts as possible & you will get this idea perfect.</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgSOHMIrIJG1mWrO16rsTXGCg7ZiXfksRNKJND9x0uFbtDeBUQXmHMoxPhv9uh9Y0T31xS5429d4Df3-Yc8rgHqV078UDyN-yapt2ekB4I-eY-1pW64NfSGq2yixf81UyEw9mz8N45Urno/s1600/PicsArt_06-19-12.01.37.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="300" data-original-width="841" height="114" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgSOHMIrIJG1mWrO16rsTXGCg7ZiXfksRNKJND9x0uFbtDeBUQXmHMoxPhv9uh9Y0T31xS5429d4Df3-Yc8rgHqV078UDyN-yapt2ekB4I-eY-1pW64NfSGq2yixf81UyEw9mz8N45Urno/s320/PicsArt_06-19-12.01.37.png" width="320" /></a></div>
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The above chart ofAxis bank june-2014 spining top before stochastic line(red) approaching 20.The signal line just reached the oversold region & spining top, trendchanger candle appeared. Look at the vertical line. The candle is red spining top, stochastic near to 20& see the next candle. It is green proving trend change. </div>
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<b>Don't trade in overbought or oversold condition -</b></div>
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgW2dG6cJXhr_W7-qTujPYgY5OthcqoEJ-ldTE9E760BOoN2khY5_o72Z1VlL6H-Ukc7r5fLHihzc-H1mApIuV87agH-xfr1UjIHBZPvX7o417zeegVtIVSyWXmCW2TdnEZU-StYdRRv_0/s1600/Screenshot_2020-06-19-17-48-43.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="960" height="160" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgW2dG6cJXhr_W7-qTujPYgY5OthcqoEJ-ldTE9E760BOoN2khY5_o72Z1VlL6H-Ukc7r5fLHihzc-H1mApIuV87agH-xfr1UjIHBZPvX7o417zeegVtIVSyWXmCW2TdnEZU-StYdRRv_0/s320/Screenshot_2020-06-19-17-48-43.png" width="320" /></a></b></div>
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In the above chart, the stochastic remained in overbought conditions over a longer period & then a spining top appeared. But it could not reverse the trend. See the next to vertical line it is strongly bullish. Here our theory failed. So it is advised not to trade by this method in prolonged overbought & oversold condition. </div>
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Wait for stochastic to freshly enter into oversold or overbought region. If trendchanger candle appears at the same time, it is the time to take trade. </div>
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<b>Don't trade in between overbought or oversold condition (20-80</b>) -</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi14wUF4SSF315BvXVwXLYo7nR0NZR582-G-WptSQHD0ACExJxfxmiIanlicW-Gt8wHYjZnsNCiWprhuPJnmmh-ZdBrw2wochEfKKv2Oulp3HjA_AvvLmQ1tnWl-RZ2FK7S_YxQR-cXdOs/s1600/PicsArt_06-19-02.11.05.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="294" data-original-width="847" height="111" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi14wUF4SSF315BvXVwXLYo7nR0NZR582-G-WptSQHD0ACExJxfxmiIanlicW-Gt8wHYjZnsNCiWprhuPJnmmh-ZdBrw2wochEfKKv2Oulp3HjA_AvvLmQ1tnWl-RZ2FK7S_YxQR-cXdOs/s320/PicsArt_06-19-02.11.05.png" width="320" /></a></div>
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Candlestick act as trendchanger candle under certain conditions & that condition is overbought or oversold condition. </div>
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If anybody expect trend change everywhere (within range 20-80),it is not possible all the time.Trendchanger candle appearing in between the range may or may not appear as trendchager depending on certain conditions like market abrupt rise or fall or any good or bad news about the stock etc. So it is advised not to trade in between the range 20-80.</div>
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If we observe the above chart the red spining top appearing in between the trend. The next candle is green but just like doji & trend continues upward. </div>
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See to the right of vertical line. When stochastic becomes oversold the red spining top appears above in the price chart & see the next candle. It is red.</div>
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<b style="text-align: left;">Inverted hammer coupled with stochastic -</b></div>
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<b style="text-align: left;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjdK23bn-X_DVDNR_IP_T4S-LEwJDKwcb-EdiNQ0uJFCqoQ8u_hkBPZTlQollXtLQdWPK6vAUH78gyvXy9eicO20Ku9Vs72d8_giBywd1qxGdM3GjhXO4J9m96-lyLTfOzv91PziOAgcl4/s1600/PicsArt_06-20-11.37.38.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="267" data-original-width="902" height="94" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjdK23bn-X_DVDNR_IP_T4S-LEwJDKwcb-EdiNQ0uJFCqoQ8u_hkBPZTlQollXtLQdWPK6vAUH78gyvXy9eicO20Ku9Vs72d8_giBywd1qxGdM3GjhXO4J9m96-lyLTfOzv91PziOAgcl4/s320/PicsArt_06-20-11.37.38.png" width="320" /></a></b></div>
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This is the ideal chart of inverted hammer showing trend change. The chart above is of Pfizer ltd. Mar-2019.</div>
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The stochastic & signal line both falling to oversold level. When both the lines intersects each other just above 20-level,inverted hammer is formed in the price chart. </div>
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See the vertical line. The intersection of signal line (white line) & stochastic line (red line) near oversold region & inverted hammer occurring above in the price chart. See the next candle, it is green proving trend change. </div>
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If you look right to vertical line, when stochastic becomes overbought & again signal line & stochastic line intersect spining top occurred. After this trendchanger candle a prominent red candle occurred.</div>
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<b>Shooting star coupled with stochastic </b></div>
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiYw5vofGYA0RaKjLCOgh2irsUG0ASi8P8nFAer-GKGckwml55_P6au7yE4LJQQw8DXgz1ev_EJ5V1MwxfKO4a5l4SaGNlkPJqG4kua5SaFsHnNbcNF21umC9Xu9ZO_jp3p1_zSKH6omSs/s1600/PicsArt_06-20-12.07.05.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="282" data-original-width="828" height="108" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiYw5vofGYA0RaKjLCOgh2irsUG0ASi8P8nFAer-GKGckwml55_P6au7yE4LJQQw8DXgz1ev_EJ5V1MwxfKO4a5l4SaGNlkPJqG4kua5SaFsHnNbcNF21umC9Xu9ZO_jp3p1_zSKH6omSs/s320/PicsArt_06-20-12.07.05.png" width="320" /></a></b></div>
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Apollo tyre chart at jan-2020 is shown above. </div>
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It shows the stage of overbought for some candles. If you closely observe when stochastic falling back from 80 ,at the same time shooting star appeared in the price chart. Look at the next candle,right side to vertical line, it is red candle. </div>
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Here signal line & stochastic line looking overlapping to each other but the trendchanger candle (shooting star) tells in advance the preceding trend is going to reverse in next candle. </div>
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<b>Dragonfly doji coupled with stochastic -</b></div>
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj-sC6BRAMr4UopAVVp6X5LsFq2Qa1Wbu5WFTYHjLMFUm7IM4i902MIWDsWi8BHFbnvnA9A2UabIU_wfQF8gL8CdaI5kqw1T548jvQ2cgix_mmiF0VyqqZZ_7mdRu7kY3jHPjtvGGlDwb8/s1600/PicsArt_06-20-12.34.00.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="292" data-original-width="830" height="112" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj-sC6BRAMr4UopAVVp6X5LsFq2Qa1Wbu5WFTYHjLMFUm7IM4i902MIWDsWi8BHFbnvnA9A2UabIU_wfQF8gL8CdaI5kqw1T548jvQ2cgix_mmiF0VyqqZZ_7mdRu7kY3jHPjtvGGlDwb8/s320/PicsArt_06-20-12.34.00.png" width="320" /></a></b></div>
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Actually<b> </b>it is the candle showing bullish reversal. The candle appearing next to it may be small but green. </div>
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The chart of shown above has dragonfly doji in price chart at vertical line. </div>
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Stochastic line is above signal line but near 20.The signal line below stochastic line indicates downtrend. </div>
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At this stage dragonfly doji appears & predicts trend reversal in advance even when signal line is below the stochastic line. </div>
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The next candle to vertical line is small but green. </div>
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If dragonfly doji appears at or nearby 20,it indicates a bullish trend reversal is going to happen. </div>
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So friends, what should be the strategy for trading? Any guess? </div>
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I am going to tell my strategy at the end of next article. </div>
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Avinash Bongardehttp://www.blogger.com/profile/11492605773113022410noreply@blogger.com0tag:blogger.com,1999:blog-2975533349952636465.post-67419242452521262452020-06-16T14:16:00.000+05:302020-06-16T15:35:40.784+05:30Trend-changer candlesticks<div dir="ltr" style="text-align: left;" trbidi="on">
There are so many trading techniques developed depending upon which indicator trader uses for trading.<br />
<b>Crossover methods -</b><br />
In this method, simple moving average(SMA) or exponential moving average(EMA) crossover methods are used.<br />
Simple moving average is calculated for a stock under observation for two different time frames, (say 20-day SMA & 50-day SMA) on the stock price chart & intersection of these two lines are treated as buy & sell signals.<br />
When SMA line of short duration (in this case 20-day SMA line) crosses & proceeds above the longer duration SMA line(in this case 50-day SMA line),it is treated as <b>buy signal. </b><br />
If<b> </b>short period SMA line crosses longer period SMA line from above & drops below it, then it is treated as <b>sell signal. </b><br />
Same is the procedure for EMA crossover.<br />
The time periods should be adjusted according to traders requirements.<br />
These methods are not suitable for intraday & sideways markets. If market is in strong uptrend or downtrend these methods can be relied upon.<br />
Actually these methods are used to identify the trend & not for actual trading.<br />
<b>Use of indicators -</b><br />
Over the years, many indicators are developed(studied earlier) for trading purposes. These are categorised as leading & lagging indicators.<br />
Leading indicators ( stochastic & RSI) are traded keeping in mind oversold & overbought conditions. If the indicator is oversold(value is 20 or below), it is treated as buy signal & if the indicator is overbought (value is 80 or above) it is treated as sell signal.<br />
Leading indicators are useful in sideways markets that is stock price is moving between a particular price range called support & resistance level.<br />
If the stock is in strong uptrend or downtrend, the indicator remains in overbought or oversold condition for a prolonged time makes it difficult to trade that particular stock.<br />
To avoid this,two graphs of same indicator(stochastic or rsi) but for different time period (may be 7-day & 14-day or 14-day & 26-day)are taken for a single stock price chart & intersection of these two lines are treated as buy & sell signals.<br />
If a short term indicator line crosses a long term indicator line from below & proceeds upward it is treated as buy signal & vice versa.<br />
Some traders couple more than one indicators to gauge entry & exit for single stock price chart.<br />
But if we couple so many indicators it creates many whipsaws & confusion resulting losses in trade.<br />
So it is always advised to couple 2 indicators at a time, at the most 3.Trader may use one indicator for entry & other for exit or you may take entry & exit considering the behaviour of both the indicators at a time.<br />
In all these trading methods candlestick & candlestick patterns are less observed & given weightage to.<br />
So my all theory solely revolve around to couple candlestick or candlestick patterns with a single indicator & find trading opportunities for intraday & swing trading.<br />
<b>Trend-changer candlesticks -</b><br />
Single candle represents the behaviour of market & traders, the candle may be minute candle, hourly, daily or weekly. Single candle describe the past & if studied properly it also predict future. Not all but many next candles can be predicted if you observe so many charts carefully.<br />
<b>Spining top -</b><br />
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgqJFZ2ClwJ4xYZ-nm6OAVufZVclWMTERLhk4QzdApk3g6aQRNslLSd_7ICeSjjd7sB7cy6KeEWdfO_S4S1Y9l6oy2dorcbJWHYd58Qwmh1dL735hBu6Lwt07NTTWxEn7mqQmDh6zw7Gho/s1600/PicsArt_05-20-04.58.24.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="141" data-original-width="287" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgqJFZ2ClwJ4xYZ-nm6OAVufZVclWMTERLhk4QzdApk3g6aQRNslLSd_7ICeSjjd7sB7cy6KeEWdfO_S4S1Y9l6oy2dorcbJWHYd58Qwmh1dL735hBu6Lwt07NTTWxEn7mqQmDh6zw7Gho/s1600/PicsArt_05-20-04.58.24.jpg" /></a></b></div>
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In this candle the body is small & tails are longer.<br />
It shows traders indecision about the particular price.Buyers pull the price upward & sellers drag it below, resulting in longer tails & short body.<br />
These candles frequently appear as trend-changer candlestick.<br />
<b>Inverted hammer & shooting star - </b><br />
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgsQWunwp2I3ihVOE0AaOyfFR_4ZwaE0RMoE12lVjMtcat3pZXx7LBIjcLyN-XWHZJXw1FrfarGZFYBQT4J_X1SF97Elg23ZIuHJ054Gso9xlB4N7CRlEl8TToibnPbP8ydVVfYmVSJbXE/s1600/PicsArt_05-20-09.10.34.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="192" data-original-width="139" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgsQWunwp2I3ihVOE0AaOyfFR_4ZwaE0RMoE12lVjMtcat3pZXx7LBIjcLyN-XWHZJXw1FrfarGZFYBQT4J_X1SF97Elg23ZIuHJ054Gso9xlB4N7CRlEl8TToibnPbP8ydVVfYmVSJbXE/s1600/PicsArt_05-20-09.10.34.png" /></a></b></div>
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Ideally these candles show tail at upper end & small body.<br />
It indicates selling pressure that is selling is more than buying.<br />
<b>Gravestone doji & dragonrfly doji - </b><br />
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiX6xh6wVAjh_kQJnTMCLvAdDFrOGp_XPM4NqG2120QbPY_4MfR3qXGXNtvo39pYUfK7NvfvyeENtYtcSOETIB4MNnemihW_0WUOTIp0aIJbbS7naj9HAmsvlNIHfowHWt5Ny8ZEPu5jIo/s1600/PicsArt_05-20-04.47.52.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="168" data-original-width="207" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiX6xh6wVAjh_kQJnTMCLvAdDFrOGp_XPM4NqG2120QbPY_4MfR3qXGXNtvo39pYUfK7NvfvyeENtYtcSOETIB4MNnemihW_0WUOTIp0aIJbbS7naj9HAmsvlNIHfowHWt5Ny8ZEPu5jIo/s1600/PicsArt_05-20-04.47.52.jpg" /></a></b></div>
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiHErrrImUN3XcFsApNirfgy-1r466NrkQn4U1IxO3ulLG6k1mEgMPe72RyhvPqw03G9TCIjDz3Za8ZSGHlChSNUHmOufUYwsFO8cCgClljIc-nWfbIdroW0p5lQFm59XQuFql8tyKFx_w/s1600/PicsArt_05-20-04.46.35.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="85" data-original-width="53" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiHErrrImUN3XcFsApNirfgy-1r466NrkQn4U1IxO3ulLG6k1mEgMPe72RyhvPqw03G9TCIjDz3Za8ZSGHlChSNUHmOufUYwsFO8cCgClljIc-nWfbIdroW0p5lQFm59XQuFql8tyKFx_w/s1600/PicsArt_05-20-04.46.35.jpg" /></a></b></div>
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These candles have longer upper or lower tails & no tail on other side & ideally have no body. These also shows indecision in the market.<br />
<b>Hammer & hanging man - </b><br />
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjWq_S8z-qxOtlfkw0gXU5iOxNZQt4HjLr-1dlNH84JWRYHFP6bkyaUxBpn3K-M46OMHmmIY8eWmrFPso1RB7mPMT0PGFwA7-kxsBdsLmHjZvBe3xF1dvdEBzKPQ1HfPnPaBxAlHWiQ2q4/s1600/PicsArt_05-20-05.01.11.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="167" data-original-width="108" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjWq_S8z-qxOtlfkw0gXU5iOxNZQt4HjLr-1dlNH84JWRYHFP6bkyaUxBpn3K-M46OMHmmIY8eWmrFPso1RB7mPMT0PGFwA7-kxsBdsLmHjZvBe3xF1dvdEBzKPQ1HfPnPaBxAlHWiQ2q4/s1600/PicsArt_05-20-05.01.11.png" /></a></b></div>
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These candles having lower tails longer & ideally no upper tail & small body.<br />
Lesser times these act as trendchanger candlestick.<br />
<b>Marubozu</b> -<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhtazOiyURrZPsmNOSONmFAY4povEIe2XbETvSaB4GdAECn-w6TCnUaCfXaPAnQjyUEnj-rjIUBWZD3ccxDiO2msbu0Y9r5g7MTKxh4Y2rNpzKrvSsNqAebbufXKE6TmEYI00ou2CkbDXc/s1600/PicsArt_05-20-04.53.55.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="124" data-original-width="55" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhtazOiyURrZPsmNOSONmFAY4povEIe2XbETvSaB4GdAECn-w6TCnUaCfXaPAnQjyUEnj-rjIUBWZD3ccxDiO2msbu0Y9r5g7MTKxh4Y2rNpzKrvSsNqAebbufXKE6TmEYI00ou2CkbDXc/s1600/PicsArt_05-20-04.53.55.jpg" /></a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEihvdMIOUx6KUlJ2rnspt0iALf8dhNlcaJYQj9mcuE8fHYAo6oSacxuMswyie1xYhJkp4LDQsmIwYam2XRVvRtvKDEjyz4zFjQ1rolehKK10QgXHtw_Qo9WxOtFgNJVawjzh8w4t35bbGc/s1600/PicsArt_05-20-04.50.29.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="159" data-original-width="163" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEihvdMIOUx6KUlJ2rnspt0iALf8dhNlcaJYQj9mcuE8fHYAo6oSacxuMswyie1xYhJkp4LDQsmIwYam2XRVvRtvKDEjyz4zFjQ1rolehKK10QgXHtw_Qo9WxOtFgNJVawjzh8w4t35bbGc/s1600/PicsArt_05-20-04.50.29.jpg" /></a></div>
Ideally these have no upper or lower tails.<br />
All these candles can act as trend-changer candlesticks under certain conditions. Let's find these conditions by coupling these candles with modern indicators.<br />
<b>Why these candles act as trend-changer candlesticks? </b><br />
All these candles have small body & long tails. Long tails indicates more buying or selling pressure which may result in trend change. When both the tails are long it also indicates indecision in market, hence may result in trend-change.<br />
So let's couple these candles with single indicator & see the trading opportunities from next lesson.<br />
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Avinash Bongardehttp://www.blogger.com/profile/11492605773113022410noreply@blogger.com1tag:blogger.com,1999:blog-2975533349952636465.post-38213429195518395412020-06-11T22:17:00.000+05:302020-06-14T22:40:09.920+05:30Ichimoku cloud indicator - tool for swing trading This theory is developed by Ichimoku Sanjin,a Japanese journalist. This technical analysis tools is used to judge the support & resistance level & the ongoing trend. It is better suited for swing trading.<br />
<b>*How to calculate ichimoku cloud-</b><br />
There are total 5 indicator lines used in this chart.<br />
<b>1. Conversion line(kenken sen) = 9-period high + 9-period low /2</b><br />
The highest & lowest values traded over previous 9-days are taken & then it's average is taken.<br />
<b>2. Base line(kijun sen</b>) <b>=26-day high + 26-day low /2</b><br />
The highest & lowest values over previous 26-days are taken & then average is taken.<br />
<b>3. Leading span A</b> <b>(senkou span) =conversion line + base line /2</b><br />
<b>4. Leading span B(senkou span) = 52-period high + 52-period low /2</b><br />
<b>5. Lagging span (chikou span) = close plotted 26-period past</b><br />
That means today's closing price is projected back 26 days on the chart.<br />
The space between the lines leading span A & leading span B is called cloud.<br />
When the leading span A line is above leading span B line,the colour of the cloud is <b>green</b> &<br />
When the leading span A line is below leading span B line, the colour of the cloud is <b>red</b>.<br />
<b>*How to use Ichimoku cloud -</b><br />
1. Cloud can be treated as support & resistance for the stock price.<br />
2. When cloud is thin, support or resistance for a particular stock is thin & may be broken easily,<br />
On the other hand if cloud big, support or resistance is strong<br />
3. When cloud remains horizontal, it indicates stock price will remain sideways.<br />
4. When cloud shows upward direction, it indicates bullish trend(uptrend),if cloud shows downward direction, it indicates bearish trend(downtrend).<br />
5. When stock price remains above the cloud for certain period, it shows strong bullish trend.<br />
6. When stock price remains below the cloud for certain period, it shows strong bearish trend.<br />
7. If the stock price remains within the cloud, it indicates ongoing trend is going to continue.<br />
* <b>Ichimoku cloud strategy -</b><br />
1.When leading span A line crosses from below to leading span B & proceeds above,it is <b>buy</b> <b>signal</b>.<br />
2. Conversely, when leading span A line crosses from above to leading span B & falls below it is <b>sell signal</b>.<br />
3. When conversion line crosses base line from below & proceeds upward, it's <b>strong buy</b> <b>signal</b>, whether stock price is above or below the cloud.<br />
4. When conversion line crosses & drops below base line, it's <b>strong sell signal.</b><br />
Still some signals are observed for buy & sell (entry & exit).<br />
1. If the price is above the cloud, it is treated as bullish signal.<br />
2. If price falls below the cloud, it is treated as bearish signal.<br />
3. If the cloud is green, that is leading span A is above leading span B line, it confirms uptrend.<br />
4. If the cloud is red, that is leading span A is below leading span B, it confirms downtrend.<br />
5. If the price is above base line, it confirms uptrend.<br />
6. If price falls below the base line, it confirms downtrend.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiwh_7aIkHrrRTW-T_K5cH-EyslGAsmD5_GHCBLIFiI9UBDtFC43mrCy_svMEW17-qDKHmmU1LeHMh2jGfSAcggWAr1IWPav5hUIAjYVPCdfke73WaYneYDQ88IJeDPLaGEI_Qfg-9boHQ/s1600/PicsArt_06-11-07.46.05.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="250" data-original-width="877" height="91" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiwh_7aIkHrrRTW-T_K5cH-EyslGAsmD5_GHCBLIFiI9UBDtFC43mrCy_svMEW17-qDKHmmU1LeHMh2jGfSAcggWAr1IWPav5hUIAjYVPCdfke73WaYneYDQ88IJeDPLaGEI_Qfg-9boHQ/s320/PicsArt_06-11-07.46.05.png" width="320" /></a></div>
The above figure shows the graph of Ceat tyre in year 2018.Ichimocu graph is plotted on the stock price chart.<br />
Initially, when conversion line(blue line) crosses base line(red line) & proceeds above a strong uptrend occured,green cloud formed after so many candles.<br />
Green cloud confirmed the uptrend, but it could not sustain so much & downtrend occurred in the presence of green cloud.<br />
So instead of green or red cloud, conversion line & base line should be observed carefully for swing trading.<br />
Green or red cloud occur latter, before which trend starts.cloud doesn't give any buy or sell signals, just they confirm the trend.<br />
Cloud can tell support & resistance.<br />
Another thing you may observe, the uptrend sustained uptill the base line remained below the price chart,hence it may be treated as sell signal when base line crosses price chart & proceeds above.<br />
<b><br /></b>Avinash Bongardehttp://www.blogger.com/profile/11492605773113022410noreply@blogger.com0tag:blogger.com,1999:blog-2975533349952636465.post-6419545793621345162020-06-09T21:52:00.001+05:302020-06-14T22:40:10.002+05:30Bollinger band--the measure of volatility.<b>Bollinger band-</b><br />
This theory is developed by John Bollinger. It measures the volatility of stock under observation. It predicts oversold & overbought conditions of stock.<br />
It consists of three lines<br />
1. The simple moving average (SMA) over a predetermined period (n) is plotted on stock price chart.<br />
2. The upper & lower bollinger band lines are calculated by adding & subtracting standard deviation from simple moving average price(SMA).<br />
As standard deviation uses average of price range,hence SMA line is used in Bollinger band,instead EMA line can also be used.<br />
Generally 20-day SMA & 2 standard deviation above & below SMA line are plotted.<br />
If the period of SMA is changed, the standard deviation should be changed accordingly. If we use 50-period SMA, standard deviation should be 2.1,& if we are using 10-period SMA standard deviation used should be 1.9.<br />
The look-back period for SMA & standard deviation should be same.<br />
<b>What is standard deviation</b> -<br />
Standard deviation tells by how much the values of a given set differs from mean(average) of a given set of values.<br />
Low standard deviation denotes values of a given set are close to mean (average) of a given set.<br />
High standard deviation denotes values are more spread from the mean(average).<br />
<b>How to calculate standard deviation -</b><br />
The standard deviation is calculaed by the following formula-<br />
SD = √1/N*€(x1-u) ²<br />
Where<br />
N= total number of values in a given set.<br />
x1,x2,x3...= values of given set.<br />
u= mean(average) of values of a given set.<br />
The mean value(u) is subtracted from each value indivisually& then summation of all these values are taken, then dividing by number of values, it's square root is taken.<br />
Now-a-days, standard deviation calculator is available on internet & not needed to calculate it manually.<br />
<b>How to calculate Bollinger band-</b><br />
The billing band is calculated by following formula,<br />
<b>Middle line(20-day SMA line) = addition of previous 20 closing prices of stock price /20</b><br />
<b>Upper line= 20-day SMA + 2*(standard deviation) </b><br />
<b>Lower line=20-day SMA-2*(standard deviation) </b><br />
The<b> </b>region between middle line & upper line is called upper band, while the region between middle line & lower line is called lower band.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiwwwNrenNts4RUsROBiOHOMs0uyemOV3GR9kT6aTkLj8vpD5OhOCimEkORQMQzt1QX55OWVBeYvw872iATjmGj6lCd4wQsb-iCiC0ui7RJZrcpfra1oXbfseooXIQLv8Inwqadvuh5tBY/s1600/PicsArt_06-09-09.02.37.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="184" data-original-width="504" height="116" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiwwwNrenNts4RUsROBiOHOMs0uyemOV3GR9kT6aTkLj8vpD5OhOCimEkORQMQzt1QX55OWVBeYvw872iATjmGj6lCd4wQsb-iCiC0ui7RJZrcpfra1oXbfseooXIQLv8Inwqadvuh5tBY/s320/PicsArt_06-09-09.02.37.jpg" width="320" /></a></div>
<b>W-bottom pattern -</b><br />
It occures before strong uptrend. It contains two lows within the band, second of which may be lower than the first.<br />
The first low may be slightly below the lower band, then stock proceeds above, may go above middle line(SMA line), then reverses back making lower low than the first, but rests on the lower band & then proceeds to overbought condition.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjB_raYyMEdxYo3qxmVi3ygTarxq9rcfIbizs0z_ZHDSAXWrOKBM7BbqkYS-4HS5lMyHp2kcFmtFZOn2ftc3MAPfdkTSg0ThpkluGVIWk6kkmtAuN9gDeh8CspPHDVPsSZ56jwe_Osk0oE/s1600/PicsArt_06-09-08.38.52.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="227" data-original-width="487" height="149" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjB_raYyMEdxYo3qxmVi3ygTarxq9rcfIbizs0z_ZHDSAXWrOKBM7BbqkYS-4HS5lMyHp2kcFmtFZOn2ftc3MAPfdkTSg0ThpkluGVIWk6kkmtAuN9gDeh8CspPHDVPsSZ56jwe_Osk0oE/s320/PicsArt_06-09-08.38.52.png" width="320" /></a></div>
<b>M-top pattern-</b><br />
It occurs before strong downtrend. In this pattern, the first high can be higher or lower than the second top.<br />
The first high may be created above the upper band, then price reverses & touches or go below middle line, then again the second top is formed but fails to touch the upper band & then price proceeds to oversold region.<br />
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In strong uptrend or downtrend the stock price may remain above or below the upper or lower band respectivally for a certain period, which may create confusion to traders.<br />
When the band shrinks, it does mean, the closing prices are near to average value(SMA line) because standard deviation is used to calculate the upper & lower bands. It indicates volatility is less. Less volatility suggests variation in stock price is less, indicating stock will remain sideways.<br />
On the other hand, when bollinger band expands, it indicates the closing prices are far spread out from mean(SMA line), volatility is increasing. Volatility is increasing means more variation in stock price.<br />
The demerit of bollinger band is that, it predicts the volatility but unable to predict the direction that is uptrend or downtrend.<br />
Hence bollinger band should not be used alone,but should be coupled with other indicators.<br />
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Avinash Bongardehttp://www.blogger.com/profile/11492605773113022410noreply@blogger.com0tag:blogger.com,1999:blog-2975533349952636465.post-32652782438463051532020-06-09T13:15:00.006+05:302021-01-03T12:18:59.371+05:30Elliott wave theory<div dir="ltr" style="text-align: left;" trbidi="on">
Before going to study Elliot wave, let's see what is support & resistance.<br />
<b>Support & resistance - </b>You might have well observed that the stock price doesn't increase or decrease linearly but crests & troughs are made at regular intervals.<br />
There is certain stock price below which stock price doesn't go for a certain period of time. This is called <b>support level. </b><br />
This is the stock price at which huge amount of buying happens & bulls control the downward movement of stock price. Buyers becomes confident about that certain value of stock price.<br />
Similarly there is certain value of stock price above which stock price can't go over a certain period. This is called <b>resistance level. </b><br />
Now buyers are not confident about the price huge amount of selling occurs .Here bears come into play & stock price gets resistance to go above that particular level.These support & resistance levels yields opportunities to trade ('entry & exit')<br />
The propagation of stock price from support level to resistance level is called <b>uptrend, & </b><br />
The propagation of stock price from resistance level to support level is called <b>downtrend. </b><br />
When resistance level is broken by a stock & proceeds above then the same resistance level acts as support level for the stock.<br />
<br />
<b>Elliott wave theory </b><br />
The theory is named after the inventor Ralph Nelson Elliot. He studied past 75 years stock market data & came to some conclusion which he put into theory called Elliott wave theory.<br />
Elliott wave theory depends on the assumption that whatever chart pattern made by stock or index over a larger time frame is sames the chart pattern made over a smaller time frame.<br />
According to Elliott, the chart pattern made over multi-centuries (called grand supercycle),is same as the chart pattern over 40 to 70 years ( called 'super cycle'), is same as chart pattern over one to many years ( called 'cycle' ),is same over few months to couple of years ( called 'primary'), is same over few weeks to some months ( called 'intermediate) ,is same over some weeks ( called 'minor'), is same over some days ( called 'minute'), is same over some hours ( called' minutte'), & is same over minutes ( called 'sub - minutte').<br />
Elliot wave pattern consists of 'impulsive wave' & 'corrective wave'.<br />
Impulsive wave consists of 5 sub-wave's & corrective waves consists of 3 sub-waves, total 8 waves in a cycle.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjOTAwKXcOQMDCFdion5d3zIoOMe1GbI0YENFhff1ElrpE5A8rUCLyvWcosPKJJ5y0fKEErUIjDwHOmb7kfj-hYdhuSVDK4tHmyvLGsfyGlAhdJc1rkHugIjs3qQxm7XOd9a62uhnqYqgQ/s1600/PicsArt_05-15-02.50.14.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1147" data-original-width="1600" height="229" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjOTAwKXcOQMDCFdion5d3zIoOMe1GbI0YENFhff1ElrpE5A8rUCLyvWcosPKJJ5y0fKEErUIjDwHOmb7kfj-hYdhuSVDK4tHmyvLGsfyGlAhdJc1rkHugIjs3qQxm7XOd9a62uhnqYqgQ/s320/PicsArt_05-15-02.50.14.png" width="320" /></a></div><div class="separator" style="clear: both; text-align: center;"> 1-2-3-4-5 impulsive wave &</div><div class="separator" style="clear: both; text-align: center;">A-B-C corrective wave</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
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In the above figure the sub-waves 1,2,3,4 & 5 completes a larger' impulsive wave' while the sub-waves a, b & c completes 'corrective wave'.<br />
As stated by Elliott, this pattern still consists of sub waves.<br />
Impulsive wave 1,3,5 & also ' a & c' (because these sub-waves are impulse waves of correction pattern), consists of 5 sub-waves & the corrective waves 2,4 & also' b' ( because this is corrective wave in downward movement) consists of 3 waves.<br />
Hence the figure is modified as below.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhS9FH16y7cniYI6boM31FoJu4aPj_nS-Zl-h8DL5MjLFpA7d9XZv3oHH2kwsHjmTiRxZvWYRbjLmM_k7YKrYPMYhUxzLIWpjlQCcpx2gigWQ8CWgmHqg-yocyq2sWMizGlFjcIv997aOs/s1600/PicsArt_05-15-05.44.34.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="339" data-original-width="567" height="191" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhS9FH16y7cniYI6boM31FoJu4aPj_nS-Zl-h8DL5MjLFpA7d9XZv3oHH2kwsHjmTiRxZvWYRbjLmM_k7YKrYPMYhUxzLIWpjlQCcpx2gigWQ8CWgmHqg-yocyq2sWMizGlFjcIv997aOs/s320/PicsArt_05-15-05.44.34.jpg" width="320" /></a></div><div class="separator" style="clear: both; text-align: center;">Elliot wave 1-2-3-4-5-A-B-C </div><div class="separator" style="clear: both; text-align: center;">Showing internal waves</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
Elliott wave pattern is also formed in downtrend.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiTHW2SGaYnvYuAyU2ZU1JuZSa0L63xPY79NguhhpwXp0DfRQqE9FZTUaMvBO9Yqm5UYZR3ye-dX1ojVt_0cg9EwOrn-zgN4anAInoU14olcvfcx7TrIhSWK9b-_EwE8F3ktldu_2071Jc/s1600/PicsArt_05-15-06.02.22.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="388" data-original-width="671" height="185" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiTHW2SGaYnvYuAyU2ZU1JuZSa0L63xPY79NguhhpwXp0DfRQqE9FZTUaMvBO9Yqm5UYZR3ye-dX1ojVt_0cg9EwOrn-zgN4anAInoU14olcvfcx7TrIhSWK9b-_EwE8F3ktldu_2071Jc/s320/PicsArt_05-15-06.02.22.jpg" width="320" /></a></div><div class="separator" style="clear: both; text-align: center;">Elliot wave 1-2-3-4-5-a-b-c in downtrend</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
Sub-waves 1,2,3,4,5 are part of 'impulsive wave' while sub-waves a, b, c form corrective wave.'<br />
Sub-waves 1,3,5 coupled with 'a & c' consists of impulsive wave within while sub-wave 2,4 coupled with 'b' consists of corrective waves within as shown below.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-2TwwUjkXpCUgVkQclXcsqjco6XSnDJArT0Btio1JkNm-A1_1nsPNrW1AuKQirv3ieGpPc8MhbBHspqcaPnhwjqQo5RKvdZJ3wFgRpKHyBznCdQn-gJPWIDrwopfCH8kXN8LfBARVRyA/s1600/PicsArt_05-15-06.30.59.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="337" data-original-width="529" height="203" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-2TwwUjkXpCUgVkQclXcsqjco6XSnDJArT0Btio1JkNm-A1_1nsPNrW1AuKQirv3ieGpPc8MhbBHspqcaPnhwjqQo5RKvdZJ3wFgRpKHyBznCdQn-gJPWIDrwopfCH8kXN8LfBARVRyA/s320/PicsArt_05-15-06.30.59.png" width="320" /></a></div><div class="separator" style="clear: both; text-align: center;">1-3-5 & a-c impulsive wave while</div><div class="separator" style="clear: both; text-align: center;">2-4 & b corrective wave</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
Pre-requisite for Elliott wave -<br />
Any wave to be treated as Elliot wave must fulfill the following three conditions,<br />
1. Wave 2 should not retrace back more than or equal to 100% of sub-wave 1.<br />
2. Wave 4 should not retrace back more than or equal to 100% of sub-wave 3.<br />
3. Wave 3 should exceed peak of wave 1 & should be longest of all 5 waves.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiTADKEyL-d6QC_U4ZLigypZ6kuCGiF5iDugf7Q2R3x1CgBZx1gH7IhKksMGTPyYXRLhyiQjQC0NNowyP4jNDSXHqMdl6Hv84TB1IzhGWL1npzO0v82Mp3qgsvlMDqkllVGAc6suZme9AA/s1600/PicsArt_05-15-05.59.35.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="363" data-original-width="417" height="278" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiTADKEyL-d6QC_U4ZLigypZ6kuCGiF5iDugf7Q2R3x1CgBZx1gH7IhKksMGTPyYXRLhyiQjQC0NNowyP4jNDSXHqMdl6Hv84TB1IzhGWL1npzO0v82Mp3qgsvlMDqkllVGAc6suZme9AA/s320/PicsArt_05-15-05.59.35.png" width="320" /></a></div><div class="separator" style="clear: both; text-align: center;">Elliot wave corrected by Fibonacci</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
The lengths of sub-waves is determined by <b>Fibonacci</b>.<br />
<b>*Fibonacci & Elliot wave -</b><br />
<b>*Fibonacci sequence -</b><br />
Fibonacci sequence is set of numbers that starts with two natural numbers 0 & 1. The every next number called<b> Fibonacci number </b>is calculated by adding the previous two numbers. The sequence so formed is called Fibonacci sequence.<br />
Thus the next number after 0,1 is 0+1=1 & the series becomes<br />
0,1,1.<br />
The next Fibonacci number is calculated by adding the previous two numbers that is 1+1=2<br />
Then the sequence bbecome<br />
0,1,1,2<br />
If we go on calculating like this the sequence becomes<br />
0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144.........<br />
This is called <b>Fibonacci sequence. </b><br />
Excluding some first numbers in the sequence if we divide any number by the next number the ratio is approximately .618 (called golden ratio) that is 61.8% .<br />
Excluding some first numbers in the sequence if we divide any number by the second right number the approximately comes .382 which is 38.2%.<br />
Excluding some first numbers if we divide any number by third right number the ratio approximately comes .236 which is 23.6%.<br />
The golden ratio .618 is found in nature in so many places like galaxy formation, sunflower seed array etc. Hence the area of interest whether these ratios can be applied in stock market.<br />
Elliott wave on it's own doesn't give buy or sell signals unless coupled with any indicator, still by <b>Fibonacci ratios, </b>approximate support & resistance levels can be calculated.<br />
These levels can be used for entry, stop-loss or exit by using the Fibonacci ratios 23.6% ,38.2%, 61.8% & 78.6% to the previous moves.<br />
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Avinash Bongardehttp://www.blogger.com/profile/11492605773113022410noreply@blogger.com1tag:blogger.com,1999:blog-2975533349952636465.post-9230467024905929242020-06-07T23:50:00.001+05:302021-01-03T11:46:16.750+05:30MACD - the trend following indicator. <div dir="ltr" style="text-align: left;" trbidi="on">
Before going to study MACD, let's see moving averages in brief.<br />
Moving average, as name suggests, is average of close prices of a particular stock over a predetermined period of time.<br />
The addition of close prices of stock is taken & that is divided by number of periods.<br />
<b>Simple moving average - </b>Every next value is calculated by deleting the earlier value & adding nearest close. The graph so formed is called simple moving average (SMA)<b>. </b><br />
The time period to be selected for SMA depends upon the traders requirement,for which time period the trader wants to trade a particular stock.<br />
Generally 20-day SMA & 50-day SMA are used for short term trading while 100-day SMA & 200-day SMA are used for long term trading.<br />
<b>Exponential moving average( EMA) -</b><br />
EMA gives more importance to recent values,thus more sensitive to changes in price.<br />
<b>How to calculate EMA</b>-<br />
To start with,the SMA of predetermined period is taken as the first value of EMA.<br />
SMA(n)=c(1)+c(2)+c(3)+......c(n) /n<br />
Where SMA(n)=simple moving average over a predetermined period .<br />
c(1),c(2),c(3)....=close prices over a period.<br />
n=chosen period( days) .<br />
As EMA gives more weightage to recent prices, <b>weighting multiplier</b> is to be calculated .It varies from period to period.<br />
Weighting multiplier = 2 /1+time period<br />
Then EMA is calculated by following formula-<br />
<b>EMA =multiplier *(close - previous day EMA) +previous day EMA. </b><br />
Moving<b> </b>average<b> </b>can be used for swing trading by <b>crossover methods. </b><br />
<b>First method</b> <b>-</b><br />
In this method, the chart of moving average is plotted on the stock price chart & the crossovers are used as trend reversal signals(entry & exit).<br />
When moving average chart crosses price chart & comes below, it is treated as <b>buy signal</b>.<br />
When moving average chart crosses price chart & goes above it is treated as <b>sell signal</b>.<br />
<b>Second method -</b><br />
For a stock price chart, two moving averages for two different periods (say 20-day & 50-day) are calculated & plotted on stock price chart .The crossover of two moving averages is treated as trend reversal .<br />
When short term moving average crosses long term moving average & proceeds above, it is treated as <b>buy signal</b>.<br />
When short term moving average crosses long term moving average & proceeds below, it is treated as <b>sell</b> <b>signal</b>.<br />
Moving averages are trend following indicators & generally used for identifying the trend. These are useful in strong uptrend or downtrend sustaining over a longer duration.<br />
Moving averages have no upper & lower boundaries, hence unable to show oversold & overbought conditions.<br />
Keeping these things in mind theory of moving average converge divergence (MACD) is developed.<br />
<b>Moving average convergence divergence (MACD) -</b><br />
This theory is developed by Gerald Apple.<br />
MACD measures the divergence or convergence between short term moving average & long term moving average. It is calculated by subtracting longer period EMA from shorter period EMA. Generally 12 & 26-day EMA are used. The graph thus plotted is called <b>fast MACD line</b>.<br />
<b>MACD = 12day EMA - 26day EMA </b><br />
A 9-day EMA of fast MACD line is then plotted on the top of MACD shown by dotted line. This is called <b>slow signal line.</b><br />
MACD uses two lagging indicators (EMA) & then it is converted into momentum oscillator by subtracting longer term moving average from shorter term moving average.<br />
The resulting line, MACD, oscillates above & below zero, without any upper or lower boundaries.<br />
If MACD is greater than zero, it indicates <b>bullish signal </b>(uptrend), as short term EMA is greater than long term EMA.<br />
If MACD is less than zero, it indicates <b>bearish signal </b>(downtrend),as short term EMA is less than long term EMA.<br />
The <b>MACD histogram</b> is calculated by taking the difference between fast MACD line & slow signal line.<br />
<b>MACD histogram = MACD line - signal line. </b><br />
<b>How to trade MACD-</b><br />
1. When MACD crosses & proceeds above signal line, it is treated as <b>buy signal. </b><br />
2. When MACD crosses & falls below signal line it is treated as <b>sell signal</b>.<br />
These signals should be confirmed with other indicators .<br />
3. When MACD line proceeds above zero line from below ,it is treated as <b>buy signal. </b><br />
4. When MACD line drops below zero line from above ,it is treated as <b>sell signal </b>.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgU4ezU0ju5WVJtEy8awMJk4aeDxw4vHfSq1VAw4nw1YOcNiUyd0W36OZ2RpMWpjjj9J2QmP7hkcto9NP_mPvOYqqvxQSujnF93tcv7EW77HaLgkHSdPsbPX3jbILSyNyVDc-pAO9QImrc/s1600/PicsArt_06-03-11.14.17.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="239" data-original-width="842" height="90" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgU4ezU0ju5WVJtEy8awMJk4aeDxw4vHfSq1VAw4nw1YOcNiUyd0W36OZ2RpMWpjjj9J2QmP7hkcto9NP_mPvOYqqvxQSujnF93tcv7EW77HaLgkHSdPsbPX3jbILSyNyVDc-pAO9QImrc/s320/PicsArt_06-03-11.14.17.png" width="320" /></a></div><div class="separator" style="clear: both; text-align: center;">MACD drawn below candlestick chart</div>
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The above figure shows candlestick chart & below it MACD graph is plotted. The two curves indicate MACD line & slow signal line. Initially MACD line crosses & drops below signal line & then goes below zero line (horizontal line).when again MACD line crosses signal line & proceeds above zero line the strong uptrend is started.</div>
Avinash Bongardehttp://www.blogger.com/profile/11492605773113022410noreply@blogger.com0tag:blogger.com,1999:blog-2975533349952636465.post-65511494341085296542020-05-30T15:07:00.006+05:302021-01-02T21:31:56.692+05:30Relative strength index - swing trading strategy<div dir="ltr" style="text-align: left;" trbidi="on">
This theory is developed by J. Welles Wilder Jr.<br />
Just like stochastic, relative strength index is also a leading momentum indicator. It follows the speed of The trend & not stock price,hence it is a <b>momentum</b> <b>indicator</b>.<br />
As momentum changes direction before price change, hence it has ability to predict trend reversal .Due to it's ability to predict it is also called <b>leading indicator.</b><br />
It is used to identify the technical strength or weakness of a particular stock.<br />
The strength or weakness of a trend is calculated over a predetermined period of time ,called look - back period.<br />
The basic principle behind the theory is that, when stock is in an uptrend, the prices will close near the high price & if the stock is in downtrend, the prices will close towards the low price .<br />
The standard period to calculate RSI is 14 - day period .<br />
Still, 5-day RSI, 7-day RSI, 10-day RSI is followed by many intraday traders.<br />
Short look-back period creates whipsaws & may create wrong entry & exit signals, hence 14- day RSI should be used, may be for intraday or swing trading.<br />
Depending upon <b>overbought & oversold conditions</b> RSI generates buy & sell signals, entry & exit.<br />
<b>How to calculate RSI -</b><br />
The formula to calculate RSI is<br />
<b>RSI= 100 - (1/1+RS)</b><br />
Where <b>RS = Average gain / Average loss</b><br />
<b>Average gain</b> = sum of gains over last 14-periods ( in simple words, addition of close prices of white(green) candles) /14<br />
<b>Average loss =</b> sum of losses over last 14-periods ( in simple words addition of close prices of black(red) candles / 14<br />
The each next value of RSI is calculated by following formula,<br />
<b>The next Average gain =( previous average gain)*13+current gain /14</b><br />
<b>The next average loss =( previous average loss)*13+current loss /14</b><br />
The chart so formed is called RSI chart.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiyOlUEBml1Jj1tA-OnTx-07izuIJoRxeIP_bodqZ-eNgS0DOh9rsuaeddJWzXmDSD_qC3Y8C9ll67fu1jg3m4PBaKWbzHaJA5MDynP1Vjx_Xd3YtmTQn1DMeLiwxvHJJRQiIjZpcRPBdU/s1600/PicsArt_05-29-08.34.54.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="412" data-original-width="769" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiyOlUEBml1Jj1tA-OnTx-07izuIJoRxeIP_bodqZ-eNgS0DOh9rsuaeddJWzXmDSD_qC3Y8C9ll67fu1jg3m4PBaKWbzHaJA5MDynP1Vjx_Xd3YtmTQn1DMeLiwxvHJJRQiIjZpcRPBdU/s320/PicsArt_05-29-08.34.54.jpg" width="320" /></a></div><div class="separator" style="clear: both; text-align: center;">Basic chart of RSI</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
The value of RSI varies between 0 - 100.<br />
If RSI value is lower than 30 it is called <b>oversold condition .</b><br />
If RSI value becomes higher than 70,it is called <b>overbought condition. </b><br />
RSI is most suited for range-bound markets, that is side-ways markets, where stock price oscillates between a certain range over a period of time.<br />
When a stock is in strong uptrend, the RSI value may continue above 70-level over a certain period of time ,similarly when stock is in strong downtrend, the RSI value may continue below 30-level over a certain period of time.<br />
In a strong uptrend, RSI remains in 40-90 range taking support at 40-50 level,<br />
Similarly, in strong downtrend, RSI remains in the range10-60 with resistance at 50-60 levels.<br />
These values may change from stock to stock.<br />
<b>Divergences</b> -<br />
Divergences occurs when, whatever chart is made by stock price is not followed or agreed by RSI.<br />
There are two types of divergences,<br />
<b>1. Bullish divergence</b> -<br />
When in a downtrend, stock price makes lower low's,but at the same time RSI makes higher low's or steady low's,then bullish divergence is said to occur.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiEI3mXfY5q8bUuY1VSB0GiOMlsrHOHTexoUknkeTTFCdyoqyZSwHh-1R_c-ZCqtOyeXp4ErahbbfO-qhT5fdrG5f_Se2VkCqvgTu_JwaGcwKVsc8dqmXFicIb1-HAoU3d0lXMeHkToGIA/s1600/PicsArt_05-29-09.41.12.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="224" data-original-width="139" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiEI3mXfY5q8bUuY1VSB0GiOMlsrHOHTexoUknkeTTFCdyoqyZSwHh-1R_c-ZCqtOyeXp4ErahbbfO-qhT5fdrG5f_Se2VkCqvgTu_JwaGcwKVsc8dqmXFicIb1-HAoU3d0lXMeHkToGIA/s1600/PicsArt_05-29-09.41.12.png" /></a></div><div class="separator" style="clear: both; text-align: center;">Bullish divergence (initially stock </div><div class="separator" style="clear: both; text-align: center;">price making crests in downward</div><div class="separator" style="clear: both; text-align: center;">direction but RSI making crest in</div><div class="separator" style="clear: both; text-align: center;">upward direction.)</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
It indicates the stock price is decreasing but the momentum is increasing ( or keeping steady ).<br />
As momentum changes direction before price, it predicts bullish trend reversal that is uptrend is going to start soon.<br />
<b>2.Bearish divergence -</b><br />
When<b> </b>in<b> </b>an uptrend, stock price makes higher highs, but at the same time, RSI makes lower low's,it is called bearish divergence.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAGSKvmP36SwsFVaN_46CrwtZ9P_6VzzfA1Ym2ZZ9amXgwv4Z-H2Psoezt5_v4Io_Da5rEbF5d28vnQ-5ZPdfe5_mvSLxcAMUf6qyfBEi76T3gFBIwx_djHkdXWwRNkq83nhxOiazo-SU/s1600/PicsArt_05-29-09.58.07.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="253" data-original-width="129" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAGSKvmP36SwsFVaN_46CrwtZ9P_6VzzfA1Ym2ZZ9amXgwv4Z-H2Psoezt5_v4Io_Da5rEbF5d28vnQ-5ZPdfe5_mvSLxcAMUf6qyfBEi76T3gFBIwx_djHkdXWwRNkq83nhxOiazo-SU/s1600/PicsArt_05-29-09.58.07.jpg" /></a></div><div class="separator" style="clear: both; text-align: center;">Bearish divergence(stock price making</div><div class="separator" style="clear: both; text-align: center;">Peaks in upward direction while RSI making crest in downward direction.)</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
It indicates stock price is increasing, but momentum is decreasing (or keeping steady) predicting bearish trend reversal, that is,downtrend is going to start soon.<br />
Divergences are seen in strong uptrends & downtrends.<br />
After making high in bulltrend(uptrend) or low in beartrend(downtrend),correction has to occur & after correction trend continues again.<br />
If we can judge corrections by RSI divergence, we can trade for certain time & capture the ongoing trend.<br />
Opposite to bullish & bearish divergences, positive & negative reversal patterns are developed .<br />
<b>Positive reversal pattern - </b><br />
In this pattern stock makes higher low's but RSI makes lower low's .<br />
<b>Negative reversal pattern-</b><br />
In this pattern, stock makes lower highs but RSI makes higher highs.<br />
<b>Swing failure -</b><br />
These types of patterns are formed when RSI reaches successively two times at the same level & reverses the direction.<br />
There are two types of swing failures,<br />
<b>1.Bullish swing failure -</b><br />
In this pattern, RSI moves below 30-level, comes above, reverses again & touches 30-level & then moves to overbought level.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhSrekbodhai59RD4huQMCgySbM2HQ9IS96NFyR9W56veh_pMxMCBVZFYwAgEe1AP71DxadTY2x1yTRKjHRX02JmoOovke6OZuVet_u0K1qI3cKU4J6pIe_bZBMMWbcvR-0givMtUrVOLc/s1600/PicsArt_05-29-10.31.33.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="248" data-original-width="78" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhSrekbodhai59RD4huQMCgySbM2HQ9IS96NFyR9W56veh_pMxMCBVZFYwAgEe1AP71DxadTY2x1yTRKjHRX02JmoOovke6OZuVet_u0K1qI3cKU4J6pIe_bZBMMWbcvR-0givMtUrVOLc/s1600/PicsArt_05-29-10.31.33.jpg" /></a></div><div class="separator" style="clear: both; text-align: center;">Bullish swing failure.</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
It is also called <b>double bottom.</b><br />
<b>2.Bearish swing failure -</b><br />
In this pattern RSI moves above 70-level, comes below 70-level, then reverses back to 70-level & then moves to oversold level.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiCqnZjExgOUAm6-kmfjesdC-u64-7r-y76bcbImhw5zqRE7E_WZM6CMosA3zkX37tBP-2qKz9ZMndxdEtX4UzMFAGmuib27pYtgaBeLhsH8ZoK9_39PQD4Y7bP1VetrdG1IA8H7pTNHjo/s1600/PicsArt_05-29-10.36.28.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="316" data-original-width="131" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiCqnZjExgOUAm6-kmfjesdC-u64-7r-y76bcbImhw5zqRE7E_WZM6CMosA3zkX37tBP-2qKz9ZMndxdEtX4UzMFAGmuib27pYtgaBeLhsH8ZoK9_39PQD4Y7bP1VetrdG1IA8H7pTNHjo/s1600/PicsArt_05-29-10.36.28.png" /></a></div><div class="separator" style="clear: both; text-align: center;">Bearish swing failure.</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
It is also called <b>double top. </b><br />
Both the phenomenon are used for swing trading.<br />
Still RSI for different periods are calculated & intersections are used for trading. eg. 7-day RSI & 14-day RSI.<br />
RSI is more suitable for swing tradings than intraday. Before swing trading with RSI, ample examples must be observed, studied & then should be experimented on your hard earned money .<br />
We will study some examples when we study swing trading.<br />
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Avinash Bongardehttp://www.blogger.com/profile/11492605773113022410noreply@blogger.com0tag:blogger.com,1999:blog-2975533349952636465.post-23705563871333150802020-05-24T22:43:00.007+05:302021-01-02T19:40:55.826+05:30Stochastic oscillator - the leader of all indicators <div dir="ltr" style="text-align: left;" trbidi="on">
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Just by visual inspection of candlestick patterns of stock price, it is difficult to judge entry & exit. The candlestick or candlestick patterns appearing at the top or the bottom of The trend, occur so many times in between the trend indicating trend followers. So different techniques for forecasting entry & exit are developed.<br />
The first method is to take the average of close prices over a certain period & plot the same on the price chart. This is called moving average.<br />
This period may be any Of The traders requirements. Generally 20,50,100 & 200 day moving averages are calculated.<br />
In this, average ( means addition of close price over taken period divided by number of periods) of close price over a determined period is taken for a day, then for the next day, average is taken excluding the last value & adding previous close, thus period remaining the same. Thus graph is calculated everytime deleting the last value & adding previous close.<br />
Graph thus obtained is plotted on stock price chart & the intersection of both the graph ( stock price & moving average) is used for entry & exit.<br />
The second method is to plot two charts for two different periods for the same stock ( may be 20period & 50 period, 50 period & 100 period) & intersection of these two charts is used for entry & exit.<br />
The demerit of moving averages is that they don't show oversold & overbought conditions as it has no upper or lower boundaries.<br />
<b>Oversold condition -</b><br />
It indicates price has fallen to much & trend reversal may occur.<br />
<b>Overbought condition -</b><br />
It indicates price might have reached the end of uptrend & trend may reverse .<br />
There are two types of indicators ,<br />
<b>1.Lagging indicators -</b><br />
These indicators follow the trend Of The market, whether up or down. Lagging indicators depicts the ongoing trend but unable to predict trend reversal, thus gives less buy & sell signals.<br />
These indicators are useful when big uptrend or downtrend is sustained over a long period.<br />
eg. moving averages, MACD.<br />
<b>2.Leading indicators -</b><br />
Generally oscillators are treated as leading indicators.<br />
These oscillators oscillates between overbought & oversold conditions ahead Of The price & have ability to predict before the actual trend reversal.<br />
eg. stochastic, relative strength index.<br />
Oscillators measures the velocity of a trend or price move.It does not follow price,hence oscillators are also called <b>momentum</b> <b>indicators</b>. Momentum changes direction before price, hence oscillators have ability to predict the trend.<br />
*<b>Stochastic oscillator -</b><br />
This theory is developed by George Lane.<br />
The theory depends on the principle that the closing of stock price depends on the particular trend Of The stock. If trend is upward, the prices will close near to the upper end that is high & if the trend is downward the prices will close near to the lower end that is low.<br />
It compares the recent close price with the high & low values over a predetermined period, called look- back period.<br />
The assumption behind the theory is that, stock price closes to the extreme end over a look- back period before trend reversal.<br />
The standard time period to calculate stochastic is 14- period - may be 14 days, 14 weeks, or even 14 months.<br />
Smaller time periods creates false buy & sell signals, still 5-day & 9-day period is followed by many intraday traders.<br />
Now-a-days, there are computer generated software's which creates stochastic chart automatically, but anybody should know the basic .<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhWb0h10Gp85PyQcYYBQV4_WHDk1dPZYvoJ5nC3kx4K313UUKWNC3Qq-OrlVjQ6UXzaa3hoIfh7-BlScOqkThl69L9fjvAnDAEwT-dj0q7uheU_7tEloNTUJvyFfYOQ29BhxYZFlASIltU/s1600/PicsArt_05-24-06.36.57.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="138" data-original-width="531" height="103" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhWb0h10Gp85PyQcYYBQV4_WHDk1dPZYvoJ5nC3kx4K313UUKWNC3Qq-OrlVjQ6UXzaa3hoIfh7-BlScOqkThl69L9fjvAnDAEwT-dj0q7uheU_7tEloNTUJvyFfYOQ29BhxYZFlASIltU/s400/PicsArt_05-24-06.36.57.png" width="400" /></a></div><div class="separator" style="clear: both; text-align: center;">Basic chart of stochastic oscillator</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
The <b>formula</b> for stochastic oscillator is<br />
%k=100*( C - L14/ H14 - L14 )<br />
Where C = Most recent closing price.<br />
L14 = Lowest price traded over previous 14 periods.<br />
H14 = Highest price traded over previous 14 periods.<br />
%k = Value of stochastic oscillator.<br />
Suppose ,today's close price is 120$, the highest price traded over 14 day period is 150$ & the lowest value traded over 14 day period is 100$. By putting these values in the above equation ,we get the answer 40%.<br />
It indicates today's price traded 40% over a 14 period data.<br />
%k is called <b>slow stochastic indicator. </b><br />
The fast stochastic indicator is calculated by taking simple moving average of previous three periods of %k<br />
%D = k1+ k2 +k3 /3<br />
%D is called the <b>fast stochastic oscillator</b>.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhXFb1b1crH45APxwVywwMgrqYS2wpXKmj8BGDzZyKh6sqqv9GYa2APc3f_QsO64Z_Et7cckKgxs9rMY2OFGh5zMzzEh-xpHrE0xhcIJbqY2itZE99Bii0j1HLqtosRtYT_qZfWVg34GgA/s1600/PicsArt_05-24-06.51.50.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="727" data-original-width="727" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhXFb1b1crH45APxwVywwMgrqYS2wpXKmj8BGDzZyKh6sqqv9GYa2APc3f_QsO64Z_Et7cckKgxs9rMY2OFGh5zMzzEh-xpHrE0xhcIJbqY2itZE99Bii0j1HLqtosRtYT_qZfWVg34GgA/s320/PicsArt_05-24-06.51.50.png" width="320" /></a></div><div class="separator" style="clear: both; text-align: center;">Chart showing %k(fast line)(continuous line)</div><div class="separator" style="clear: both; text-align: center;">& %D(slow line)(dotted line)</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
The stochastic oscillator oscillates between 0 - 100.<br />
The value of stochastic 20 or below is treated as <b>oversold condition. </b><br />
The value of stochastic 80 or above is treated as <b>overbought condition. </b><br />
These values should not be treated rigid that trend reversal may occur. If a stock is in strong uptrend the stochastic will continue in overbought condition over a period of time.<br />
Similarly, if stock is in strong downtrend the stochastic will continue below 20 over period of time.<br />
In such conditions, other indicators should be taken help to predict the trend.<br />
<b>Convergence & divergence -</b><br />
<b>Convergence -</b><br />
When<b> </b>stochastic<b> </b>behaves in unison with stock price,the phenomenon is called convergence.<br />
There are two types of convergences,<br />
<b>a. Bullish convergence -</b><br />
When in an uptrend, stock price is making higher high's & stochastic is reacting in the same way ( making higher High's) bullish convergence is said to happen.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhSO-emeEumm-tyBGkYtBHNDCjDDq9y_540pk4gUQLkX6ABMyT5clcsqUb2DVs20Ag8bM6SAXVqGDaMA9gpLmS8R39aIOrRTndGmO-D8ZIdZIbzOqM0GwflWZTC9eEs6A57602mDVJoq6o/s1600/PicsArt_05-24-09.32.37.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="465" data-original-width="377" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhSO-emeEumm-tyBGkYtBHNDCjDDq9y_540pk4gUQLkX6ABMyT5clcsqUb2DVs20Ag8bM6SAXVqGDaMA9gpLmS8R39aIOrRTndGmO-D8ZIdZIbzOqM0GwflWZTC9eEs6A57602mDVJoq6o/s320/PicsArt_05-24-09.32.37.jpg" width="259" /></a></div><div class="separator" style="clear: both; text-align: center;">Bullish convergence(crests in price</div><div class="separator" style="clear: both; text-align: center;">chart & stochastic in upward direction)</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
It indicates <b>continuation of bullis monh trend. </b><br />
<b>b. Bearish convergence -</b><br />
In a downtrend when stock is making lower lows & stochastic is also reflecting the same, making lower low's, it is called bearish convergence<b>. </b><br />
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiNCdrnS3hTwkoFX3XKl8RBtwMDui8Va2gvpO-_wM5SxrCp6aRPpA8fRmYO61JmmH2u1BwQ0dcDGJXMWPTaQKxeCv2WPTZy9HnGR8e9N4HOJguCbzHC2dbeexjyrEwvFNSYDzsATnygoVw/s1600/PicsArt_05-24-09.43.39.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="420" data-original-width="246" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiNCdrnS3hTwkoFX3XKl8RBtwMDui8Va2gvpO-_wM5SxrCp6aRPpA8fRmYO61JmmH2u1BwQ0dcDGJXMWPTaQKxeCv2WPTZy9HnGR8e9N4HOJguCbzHC2dbeexjyrEwvFNSYDzsATnygoVw/s320/PicsArt_05-24-09.43.39.png" width="186" /></a></b></div><div class="separator" style="clear: both; text-align: center;">Bearish convergence (highs of</div><div class="separator" style="clear: both; text-align: center;">stock price & stochastic in</div><div class="separator" style="clear: both; text-align: center;">downward direction)</div>
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It indicates <b>continuation of downtrend. </b><br />
<b>Divergence -</b><br />
Divergence<b> </b>occurs when in an uptrend, stock price is making higher high's, or lower low's the stochastic is not in unison with the trend.<br />
There are two types of divergences,<br />
<b>a. Bullish divergence -</b><br />
In a downtrend, stock price makes lower low's but stochastic makes higher High's or keeping steady.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiaGeG1m9qVwWCy3TA4_agzce7KL_NdRtXjav80d1OcHhZhjChX9c_PvS7bNpB1UpfN2pf1uHh0c8nTu7XHv-Y6jzFrhJiPxbXdDae7_QPDLmkb1pJ1KaBOd3tYnAp4E3n929H1BuGiglE/s1600/PicsArt_05-24-07.03.04.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="285" data-original-width="166" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiaGeG1m9qVwWCy3TA4_agzce7KL_NdRtXjav80d1OcHhZhjChX9c_PvS7bNpB1UpfN2pf1uHh0c8nTu7XHv-Y6jzFrhJiPxbXdDae7_QPDLmkb1pJ1KaBOd3tYnAp4E3n929H1BuGiglE/s1600/PicsArt_05-24-07.03.04.png" /></a></div><div class="separator" style="clear: both; text-align: center;">Bullish divergence (crests in</div><div class="separator" style="clear: both; text-align: center;">price chart in downward direction</div><div class="separator" style="clear: both; text-align: center;">while crests in stochastic in upward</div><div class="separator" style="clear: both; text-align: center;">direction)</div>
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This indicates trend reversal from downtrend to uptrend.<br />
<b>b. Bearish divergence </b>-<br />
When in an uptrend ,stock price is making higher high's, but stochastic makes lower low's.<br />
It indicates trend reversal from upward to downward.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgZRLbr8pypb1j5fqg7V2UbRbHv1MJvANAUinyFIFw3kDrALMEg8Hj3nN9JAfVrRukoHq1ZVzAASKSswjFVdKf-eccrlur5IirAqbn3U7dvcfZIQiElHtDRHW1B86Yw2gfNbnJvIazM1IM/s1600/PicsArt_05-24-10.37.03.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="324" data-original-width="332" height="312" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgZRLbr8pypb1j5fqg7V2UbRbHv1MJvANAUinyFIFw3kDrALMEg8Hj3nN9JAfVrRukoHq1ZVzAASKSswjFVdKf-eccrlur5IirAqbn3U7dvcfZIQiElHtDRHW1B86Yw2gfNbnJvIazM1IM/s320/PicsArt_05-24-10.37.03.jpg" width="320" /></a></div>
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Convergence & divergence predicts trend change but unable to predict entry & exit.<br />
<b>How to trade with stochastic</b> -<br />
1. When stochastic is 20 or below, it is a buy signal.<br />
2. When stochastic is 80 or above, it is a sell signal.<br />
3. When %K line intersects %D line from below & proceeds upward, it is a buy signal.<br />
4. When %K line intersects %D line from above & proceeds downward, it is sell signal.<br />
Stochastic is more suitable in trading markets. There are two types of markets, trading & trending.<br />
Trading markets are range bound, oscillates between a certain range of stock price, while trending markets are those in which stock price goes on increasing or decreasing over a long period of time .<br />
If stock is sustaining in overbought or oversold condition, other indicators like MACD should be taken help to judge the ongoing move. </div>
Avinash Bongardehttp://www.blogger.com/profile/11492605773113022410noreply@blogger.com0tag:blogger.com,1999:blog-2975533349952636465.post-53862102445450637252020-05-20T21:22:00.011+05:302021-01-02T18:53:38.209+05:30Types of Japanese candlesticks<div dir="ltr" style="text-align: left;" trbidi="on">
Candlesticks is an ancient Japanese technique invented 300 years ago. Now-a-days it is commonly used & became the backbone of technical analysis .Without studying candlestick technical analysis is incomplete.<br />
As we have already seen to draw candlestick four values are required, open,close,high & low. The portion between open & close is called 'body' & the vertical lines are called shadow, tail or wick.<br />
If 'close price' is higher than 'open price' then it is called white candlestick & generally denoted by white or green colour.It is called '<b>bullish candle '</b><br />
If 'close price 'is lower than 'open price' then it is called black candlestick.It is generally denoted by black or redcolour. It is called '<b>bearish</b> <b>candle</b>'<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZGk1HDZuCyhDfS3C_UU6MUUFp7MmOwVSJktYNFTb9rpN650xsxfSY8Rm90dEIf2P99_wW29GGkjjkf2ae26WtolzMvvk5Fn3JlTEzX512coea9vg3nHDf6A01-7a2Mo6T3leAaDZ4Kuo/s1600/PicsArt_05-20-06.14.44.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="188" data-original-width="426" height="140" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZGk1HDZuCyhDfS3C_UU6MUUFp7MmOwVSJktYNFTb9rpN650xsxfSY8Rm90dEIf2P99_wW29GGkjjkf2ae26WtolzMvvk5Fn3JlTEzX512coea9vg3nHDf6A01-7a2Mo6T3leAaDZ4Kuo/s320/PicsArt_05-20-06.14.44.jpg" width="320" /></a></div><div class="separator" style="clear: both; text-align: center;">White (green) & Black(red) candlestick</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
Candlestick depicts the mood Of The market & traders. Shape of candlestick depends on so many factors, one Of The important factor is <b>volume,</b> that is buying & selling of a particular stock.<br />
If huge buying happens, obviously,stock price goes on increasing,<br />
Instead,if huge selling happens,stock price goes on decreasing & that gives rise to so many types of candlesticks.<br />
If body is longer than the wick,it shows the continuation Of the trend whether upward or downward,<br />
If 'close' is near 'high'of the day, it predicts uptrend in certain condition(that is if upper wick is shorter than lower wick),<br />
On the other hand, if ' close' is near the ' low' ,then it predicts downtrend under certain conditions(that is if upper wick is longer than lower wick)<br />
Thus candlesticks are easy to read, predict future moves & to compare with the past data,hence more popular among all charting methods for technical analysis.<br />
If body is shorter & wicks are longer,it indicates indecision in the market about on going trend & trend change may occur.<br />
There are three types of trends,<br />
1.<b>Upward trend-</b>when price of stock goes on increasing over a certain period of time,<br />
2<b>.Downward</b> <b>trend</b>- when price of stock goes on decreasing over a period of time,<br />
3.<b>sideway trend- </b>when stock price doesn't show prominent change & remains approximately same over a certain period of time.<br />
Mainly there are three types of candlestick patterns,<br />
1.<b>Single candlestick pattern </b><br />
<b>2. Double candlestick pattern </b><br />
<b>3. Triple candlestick pattern.</b><br />
Among so many types of <b>single</b> <b>candlestick</b> <b>patterns</b>, let's see some frequently observed candlesticks.<br />
<b>*Hammer- </b><br />
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjbxdqbMQR2ShbhfNH3TCbGPRqgGUVL2jQpz6fmScyFtm-ZhioQtmaIY6vJZKp9gEJHTFcecxlAQ1liQC334CtnLEMjeofsTVDoUpkxPfF-amLANAiTJmjth91y2IJkKp5BhJlD65fH-7g/s1600/PicsArt_05-20-04.38.40.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="107" data-original-width="77" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjbxdqbMQR2ShbhfNH3TCbGPRqgGUVL2jQpz6fmScyFtm-ZhioQtmaIY6vJZKp9gEJHTFcecxlAQ1liQC334CtnLEMjeofsTVDoUpkxPfF-amLANAiTJmjth91y2IJkKp5BhJlD65fH-7g/s1600/PicsArt_05-20-04.38.40.jpg" /></a></b></div><div class="separator" style="clear: both; text-align: center;">White hammer</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg7UbIA9ua_ROzmCdWDgaXnRFFEld2qu0HHt9tltOlZu4ThlZ5VhNU3lUX5o52tMVMwFGolIkgZTSIgtENKqLK_6IMt69Acrql0M234P5tR6QIbxbvY1HziPV-MxjODPLQHBfCuHjPp7H4/s1600/PicsArt_05-20-05.01.11.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="167" data-original-width="108" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg7UbIA9ua_ROzmCdWDgaXnRFFEld2qu0HHt9tltOlZu4ThlZ5VhNU3lUX5o52tMVMwFGolIkgZTSIgtENKqLK_6IMt69Acrql0M234P5tR6QIbxbvY1HziPV-MxjODPLQHBfCuHjPp7H4/s1600/PicsArt_05-20-05.01.11.png" /></a></b></div><div class="separator" style="clear: both; text-align: center;"> Black hammer</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
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As name suggests, it's shape is like hammer. Lower wick is at least two times longer than the body. Ideally, it has no upper wick, but may have a small wick.<br />
It has meaning when it comes at the end of downtrend. After a long downtrend at certain stock price, buyers become confident to buy, seller still want to drag the price lower but fresh buyers come into play & pull the price upward & at last they become successful to close the price above 'open price' or near 'below open price'<br />
This candle may be <b>green</b> or <b>red</b>, if it is green it is prominent signal, if stock opened gap down(open price below previous close price), then the signal is more prominent .<br />
If coupled with indicator(we are going to study indicators) &' support & resistance level' it gives <b>bullish</b> <b>signal</b>.<br />
<b>Hanging</b> <b>man</b> - It is just like hammer but comes at the end of uptrend.<br />
When a prominent uptrend occurs, at certain stock price, stock-holders aren't confident about the price & they want to exit, making selling pressure & they drag the price below' open price', but fresh buyers enters the trade hoping stock price to increase further. They pull the stock price above making the close above or near below 'open price'.<br />
The situation becomes worse when traders making fresh entry understand the trend reversal & wants to sell & exit. This selling pressure makes downtrend more bitter.<br />
The candle may be <b>red or green,</b>if red the signal is prominent & if day candle is gap-up open (open price is above previous close price), then the signal is more prominent.<br />
<b>Inverted</b> <b>hammer</b> -<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBBEmjM_MZD_cD47dbOTBcOh8tSGM2NROe-G2bS_h-Nh_3OufqzYD4ySkhDyIqhAkt5U3FHureY3krI58_HJ2ODtjyyYvL6bx5X5iCt2p_ig-ldIuhXxK8NXsCDkO3q-FTixbkBOSTM6s/s1600/PicsArt_05-20-04.56.31.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="92" data-original-width="55" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBBEmjM_MZD_cD47dbOTBcOh8tSGM2NROe-G2bS_h-Nh_3OufqzYD4ySkhDyIqhAkt5U3FHureY3krI58_HJ2ODtjyyYvL6bx5X5iCt2p_ig-ldIuhXxK8NXsCDkO3q-FTixbkBOSTM6s/s1600/PicsArt_05-20-04.56.31.jpg" /></a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-UuEDebQMduXyzcHB7H6myf4_eQYgqRjmHds9szcpwF36r0S2B912GwZGwZpsI8qWkIwBqaffiBTXZ7iPEKWVYP3XZWdbpexf98Di_dCdWQk9q-zv3s9iNJQciuGrrYLk0beu066vSks/s1600/PicsArt_05-20-09.10.34.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="192" data-original-width="139" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-UuEDebQMduXyzcHB7H6myf4_eQYgqRjmHds9szcpwF36r0S2B912GwZGwZpsI8qWkIwBqaffiBTXZ7iPEKWVYP3XZWdbpexf98Di_dCdWQk9q-zv3s9iNJQciuGrrYLk0beu066vSks/s1600/PicsArt_05-20-09.10.34.png" /></a></div><div class="separator" style="clear: both; text-align: center;">Different shapes of</div><div class="separator" style="clear: both; text-align: center;">inverted hammer</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
As it's name implies it's shape is like inverted hammer.<br />
It has no or little lower wick & upper wick is at least two times greater than the body.<br />
It says buyers took the price upper but sellers drag it below to close near the open price. If it appears at the end of downtrend it depicts the trend reversal from downtrend to uptrend.<br />
The body may be black(red) or white(green).<br />
If the body is green the trend is prominent & if the body is gap-down open the trend reversal is more prominent.<br />
<b>Shooting</b> <b>star</b> -<br />
It's shape is same as that of inverted hammer but it appears at the end of uptrend.<br />
It is the certain price level where sellers comes into play after an uptrend & drags the increased price below & makes resistance to up-going trend, making close near the open price.<br />
The body may be black(red) or white(green).<br />
If the body is black the trend is prominent & if the body is gap-up open the trend reversal is more prominent .<br />
<b>*spining top - </b><br />
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiBseRLo57wD_aiuPHgs1FXzXhWr-0XiZCF43XzzuBqWdmCQqt5YYXrBD4_OpGMyKRP1nFXHi-uNhxykBiNF_gWRx68Vk9wlc0IJCCUeIjpwBQx4KgJil3Z0rIDxrWckMW0i_rfLAxrAQY/s1600/PicsArt_05-20-04.58.24.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="141" data-original-width="287" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiBseRLo57wD_aiuPHgs1FXzXhWr-0XiZCF43XzzuBqWdmCQqt5YYXrBD4_OpGMyKRP1nFXHi-uNhxykBiNF_gWRx68Vk9wlc0IJCCUeIjpwBQx4KgJil3Z0rIDxrWckMW0i_rfLAxrAQY/s1600/PicsArt_05-20-04.58.24.jpg" /></a></b></div><div class="separator" style="clear: both; text-align: center;">White & Black spining top</div>
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It's shape is like' top' that children play. It's body is small & wicks are longer at least two times the 'body'.<br />
This shows indecision in the traders. Sellers drag the price below, but buyers pull the price above keeping the close price near to open price. This confusion is due to the particular stock price, whether it is' resistance level' or not.<br />
It indicates strong upmove or trend change. It should be compared with indicators or support & resistance level.<br />
The body may be black(red) or white(green).<br />
It is commonly observed in day charts.<br />
*<b>Doji</b> -<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEief1QVjIcfavUi__x5yoehh6iI_Yr7AGcxACXi8UWp0EXeX9i2-vydIHZs2awKjV-Kj6qpQtA5_dZ-uughP6m4kJCHHgMLZuW7nZPIkrU-L4yLzD1w0hHiqOaW0vPB0uovBSWvH0_H4dw/s1600/PicsArt_05-20-04.43.24.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="96" data-original-width="288" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEief1QVjIcfavUi__x5yoehh6iI_Yr7AGcxACXi8UWp0EXeX9i2-vydIHZs2awKjV-Kj6qpQtA5_dZ-uughP6m4kJCHHgMLZuW7nZPIkrU-L4yLzD1w0hHiqOaW0vPB0uovBSWvH0_H4dw/s1600/PicsArt_05-20-04.43.24.jpg" /></a></div><div class="separator" style="clear: both; text-align: center;">'Doji 'candlestick</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
This candle is formed when close price & open price are approximately equal.<br />
That indicates number of sellers & buyers are equal.sellers drag price below & buyers pull it upwards resulting in Doji.<br />
Actually it is the confusion between buyers & sellers whether the ongoing trend should continue or not.<br />
These candlesticks are often seen in 'sideways trends'.It may depict the current trend of market soon coming to an end. So these candlesticks are' wait & watch' candlesticks.<br />
There are two types of of' Doji's which may indicate trend reversal under certain conditions.<br />
a. <b>Gravestone Doji -</b><br />
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9ZoOoEXIcqDc8Iv4CcIeZzDyNfBnugh5sEBwff4YUgm-p68YPsByi9_X7qjImFbMuGKpu0Ptn-O5dMJ_l8wGxB6JQ5FaG38q9LHRdU_LOvQzbdesl0RFdHEATmutTkdUbveArK-sms5s/s1600/PicsArt_05-20-06.17.03.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="112" data-original-width="81" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9ZoOoEXIcqDc8Iv4CcIeZzDyNfBnugh5sEBwff4YUgm-p68YPsByi9_X7qjImFbMuGKpu0Ptn-O5dMJ_l8wGxB6JQ5FaG38q9LHRdU_LOvQzbdesl0RFdHEATmutTkdUbveArK-sms5s/s1600/PicsArt_05-20-06.17.03.png" /></a></b></div><div class="separator" style="clear: both; text-align: center;">Gravestone doji</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
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It looks like gravestone so the name gravestone doji.<br />
Ideally lower wick is absent, may be small practically, but having long upper wick & may have small body.<br />
It indicates buyers are confident about the price but sellers aren't & selling the stock, keeping the close equal to or near to open price.<br />
If it comes at the end of uptrend, shows trend reversal & downtrend may occur.<br />
<b>b. Dragonfly Doji - </b><br />
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<b><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiSCS8HbfK1BVWqMtz_fQ31E_cJ2g_Q6Gj0-AOkf83BEo0ys1jlgcFp5kgrOS1zxf_Qp0TV7RuiDNr9HbZ9FpLw557JdB_Pp43ScdVONAz6eRxIQ5QWiek-jKLNJjMr8qVk4yH03nQGReY/s1600/PicsArt_05-20-06.18.21.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="150" data-original-width="118" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiSCS8HbfK1BVWqMtz_fQ31E_cJ2g_Q6Gj0-AOkf83BEo0ys1jlgcFp5kgrOS1zxf_Qp0TV7RuiDNr9HbZ9FpLw557JdB_Pp43ScdVONAz6eRxIQ5QWiek-jKLNJjMr8qVk4yH03nQGReY/s1600/PicsArt_05-20-06.18.21.png" /></a></b></div><div class="separator" style="clear: both; text-align: center;">Dragonfly doji</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
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It's<b> </b>shape is like dragonfly. The lower wick is long & no or little upper wick.<br />
It indicates buyers are aggressive about the price & buying the stocks from sellers, making no or little body.<br />
If it comes at the end of downtrend it depicts ongoing trend coming to an end & fresh uptrend may start.<br />
<b>Marubozu</b> -<br />
Marubozu means 'bald' in Japanese language, having no hairs on head,that means candle has no or very little wicks as compared to body.<br />
The candle may be black (red) or white(green).<br />
In <b>white</b> <b>marubozu</b> open price is equal to low price & close price is equal to high price .<br />
It indicates buyers are totally dominating & sellers are recessive ,what-so-ever price buyers are opting for, sellers are agreeing to it.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEie5-aL8BjpwupoEV5cqPVoxPTTiLqta6FtkUQ_GmcCnGrKdYquSukSB5CdKbKV76YjfuZgutWTzbmzechAM1wiu-dcKoq5tPBrYEUcVGRCY5hZ7JzIi27L5ZWwoOVYVYdG5a8zUjvB180/s1600/PicsArt_05-20-04.50.29.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="159" data-original-width="163" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEie5-aL8BjpwupoEV5cqPVoxPTTiLqta6FtkUQ_GmcCnGrKdYquSukSB5CdKbKV76YjfuZgutWTzbmzechAM1wiu-dcKoq5tPBrYEUcVGRCY5hZ7JzIi27L5ZWwoOVYVYdG5a8zUjvB180/s1600/PicsArt_05-20-04.50.29.jpg" /></a></div><div class="separator" style="clear: both; text-align: center;">White marubozu</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
In <b>black</b> <b>marubozu</b>, the open price is equal to high price & close price is equal to the low price Of The day.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgG_mK6NzPaLGCKxcvaGc3UObQ2oExnQ5id40FoOXGNMdvZeCEjs7ziRS1NTeUzGGHZCTXxf2ZnDHnSYoElykTIhBN4VMy7SH1zuIJqrSXfmnL1d-a1GkvA79DaovNHBDa5_-C_fSrc-Sw/s1600/PicsArt_05-20-04.53.55.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="124" data-original-width="55" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgG_mK6NzPaLGCKxcvaGc3UObQ2oExnQ5id40FoOXGNMdvZeCEjs7ziRS1NTeUzGGHZCTXxf2ZnDHnSYoElykTIhBN4VMy7SH1zuIJqrSXfmnL1d-a1GkvA79DaovNHBDa5_-C_fSrc-Sw/s1600/PicsArt_05-20-04.53.55.jpg" /></a></div><div class="separator" style="clear: both; text-align: center;">Black marubozu</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
It indicates sellers are completely dominating the day & no buyers are there in the market.<br />
Generally marubozu occurs when any news comes in the market, in favour of or against the particular stock .Absence of sellers indicates,sellers are waiting the stock price to reach to a particular level.<br />
Absence of buyers indicates, buyers are waiting the stock price to reach to a particular level.<br />
In both the cases marubozu represents <b>continuation</b> <b>of</b> <b>trend</b> <b>or</b> <b>trend</b> <b>reversal</b>.<br />
If a particular price buyers want to buy or sellers want to sell is not reached in a day the trend continuation will occur, & if buyers or sellers are confident about the price, at the end Of The day, the trend reversal may occur the next day.<br />
we are going to study' double candlestick patterns '& 'triple candlestick patterns' when we will study swing trading.<br />
<b>Candlestick</b> <b>interpretation</b> -<br />
Candlestick patterns may be' single candlestick pattern ' or 'multiple candlesticks pattern 'alone doesn't predict the future trend. Sometimes it works, sometimes not. That's why it should be coupled with any Of The indicators ,or 'support & resistance' or' pivot points' etc. Without this it may produce so much confusion to traders.<br />
No system is perfect in stock market & 1+1=2 doesn't happen all the time. Theoretically whatever knowledge we get, it should be applied many more times to practical graphs, learn so many things yourself which nobody can explain to you.<br />
From next article,we will learn 5 indicators & then we will couple candlestick with the indicator & see how intraday & swing trading (to hold stock for some days) opportunities may occur.<br />
So friends, how are you feeling? Write to me about the content, my writing style, everything on my email. Your suggestions are always welcome!<br />
bye bye.. .have a nice time.<br />
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Avinash Bongardehttp://www.blogger.com/profile/11492605773113022410noreply@blogger.com0tag:blogger.com,1999:blog-2975533349952636465.post-62877054206123197862020-05-11T14:32:00.011+05:302021-01-02T17:32:51.576+05:30Introduction to stock market<div dir="ltr" style="text-align: left;" trbidi="on">
Hello friends, I Am Avinash & welcome to my blog Tradeintra. blogspot. Com.<br />
The purpose of writing this blog is to discuss the ideas,learn from your comments & hope improvement in trading on both the sides, thus making trader able to self analyze any stock & take decision to trade rather than to rely on anybody else to take trade.<br />
Here I Am going to discuss the basic concepts related to stock market & share my thoughts about intrday & swing trading, hence the name 'new approach to intraday trading'<br />
To understand the behaviour of stock price ,with time, different chart patterns are developed. The aim of these chart patterns is to analyze the past behaviour of stock price & to predict future stock price. This is called <b>technical</b> <b>analysis</b>.<br />
Technical analysis assumes 'History Repeats'. As human emotions hope, fear, greed remains same chart repeats after a definite interval of time. The technical analanalysis helps trader when to enter in a trade & when to exit a trade(entry & exit).<br />
There are different types of charts. Popular charts are as below.<br />
<b>1.Line</b> <b>chart</b> - To draw a line chart only closing prices of a stock are taken.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjSdhus5UkjgSyr5UXoe8Y4JPBrMHjFMuEvZ-ZrUtyXQCfYj131WL10pTrd01Fmfvbc6wkTB4XeffvW1ubsqZrNFpjWRYM9DxClmn6bHCG_i5Y2AWgPCbLMiMI5JYe2LLo547cd_7w3qCA/s1600/PicsArt_05-15-03.25.14.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="625" data-original-width="919" height="217" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjSdhus5UkjgSyr5UXoe8Y4JPBrMHjFMuEvZ-ZrUtyXQCfYj131WL10pTrd01Fmfvbc6wkTB4XeffvW1ubsqZrNFpjWRYM9DxClmn6bHCG_i5Y2AWgPCbLMiMI5JYe2LLo547cd_7w3qCA/s320/PicsArt_05-15-03.25.14.jpg" width="320" /></a></div><div class="separator" style="clear: both; text-align: center;">Chart connecting closing prices</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
<b>2.Bar</b> <b>charts</b> -To draw bar chart four values open,close,high & low are required.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJI28Vryqjouia58jyGnptD5xg4NePwIXVXwgS2fADqa3Cq9_Jff6ddekMILgKCSEpCKZTK4c5ODBn30Aa-zjnt_uIMA7Srz-3_7HJjl3jzR_kdAvEAMLEEnSUN1g-GEhkgQRf_r1DWu0/s1600/PicsArt_05-15-03.19.53.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="835" data-original-width="1120" height="238" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJI28Vryqjouia58jyGnptD5xg4NePwIXVXwgS2fADqa3Cq9_Jff6ddekMILgKCSEpCKZTK4c5ODBn30Aa-zjnt_uIMA7Srz-3_7HJjl3jzR_kdAvEAMLEEnSUN1g-GEhkgQRf_r1DWu0/s320/PicsArt_05-15-03.19.53.jpg" width="320" /></a></div><div class="separator" style="clear: both; text-align: center;">Basic diagram of bar chart</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
The upper end of bar represents <b>highest</b> <b>value</b>, while lower end represents <b>lowest</b> <b>value</b> Of the stock on that day.<br />
The small horizontal line left to vertical line is <b>open</b> <b>price</b> while small horizontal line to the right of vertical line represents <b>close</b> <b>price</b> of a particular stock on that day.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLg4cB1plc8X22w0scFBn8UsE_yyI8HJmqEqODp6dK6hXyMddODJ0rqkPb77B3OcLuqKbkmuTtoLh4xfwH5mlB46TFzD7d8zhDM8NWSaY7ic0-rlquoWEECQhyPZeqqaCxPNsYd7yyhNM/s1600/PicsArt_05-15-03.15.18.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="688" data-original-width="887" height="248" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLg4cB1plc8X22w0scFBn8UsE_yyI8HJmqEqODp6dK6hXyMddODJ0rqkPb77B3OcLuqKbkmuTtoLh4xfwH5mlB46TFzD7d8zhDM8NWSaY7ic0-rlquoWEECQhyPZeqqaCxPNsYd7yyhNM/s320/PicsArt_05-15-03.15.18.jpg" width="320" /></a></div><div class="separator" style="clear: both; text-align: center;">Bar chart per day over a period</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
Among all chart patterns candlestick patterns are widely accepted & used for chart analysis.<br />
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To draw a candlestick four values are required, open, close, high, low over a particular time period.<br />
You may draw candlestick of any period one minute, two minutes, 5miniutes, 1hour, 1day, a week, a month depending upon what type of trader you are, how much time you want to remain in the trade.<br />
Here we are going to discuss day trading so I will concentrate on a day candlestick.<br />
<b>Open</b> - The price of a particular stock at the time when market opens.<br />
<b>Close</b> - The price of a particular stock at the time when market closes at the end Of The day.<br />
During the market hours the value of a stock varies depending upon buying & selling (volume) of a stock, news, rumors, announcement by management, government economical strategies etc.<br />
<b>High</b> - The highest price reached by a stock during that particular day.<br />
<b>Low</b> - The lowest price attained by a stock during that particular day.<br />
Candlestick consists of body & shadow(or tail).<br />
There are two types of candlesticks white candlestick & black candlestick.<br />
<b>White</b> <b>candlestick</b> -When closing price of stock is higher than the open price of stock, it is called white candlestick. Generally it is denoted by white or green colour.<br />
It is also <span face="sans-serif">called </span>bullish candle.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgT0vgdSM1bE9K9OBjCNpWc6xPRvMu7phESgowmSPhp7-y6x8qqkr5QNh0x0sv1DZNyh9iclGdanWUJRwstz63uPpFvqSFpK_stSIKFLgdJUkWhGnxhSttGIh7rALZoe-rieFcnHYfxgdo/s1600/PicsArt_05-07-10.13.07_1.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="172" data-original-width="204" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgT0vgdSM1bE9K9OBjCNpWc6xPRvMu7phESgowmSPhp7-y6x8qqkr5QNh0x0sv1DZNyh9iclGdanWUJRwstz63uPpFvqSFpK_stSIKFLgdJUkWhGnxhSttGIh7rALZoe-rieFcnHYfxgdo/s1600/PicsArt_05-07-10.13.07_1.png" /></a></div><div class="separator" style="clear: both; text-align: center;">White(green) candle,bullish candle</div>
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<b>Black</b> <b>candlestick</b> -when closing price of a stock is lower than open price then it is called black candlestick. It is generally denoted by black or red colour.<br />
It is called bearish candle.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgFuGWmUrlLUrvZC_pIh3uzLB4N0D-gykHPe84W19HO962_YfCUhKWHKcPdPr93BN0OFV58Y8-kc5oEDHgwYGetuQ84wneaWDvDEtpOv8gQUYsY8fEGqf1l62Jmo-WjaJGbrfQpFU6eoW8/s1600/PicsArt_05-08-10.52.35.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="171" data-original-width="204" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgFuGWmUrlLUrvZC_pIh3uzLB4N0D-gykHPe84W19HO962_YfCUhKWHKcPdPr93BN0OFV58Y8-kc5oEDHgwYGetuQ84wneaWDvDEtpOv8gQUYsY8fEGqf1l62Jmo-WjaJGbrfQpFU6eoW8/s1600/PicsArt_05-08-10.52.35.jpg" /></a></div><div class="separator" style="clear: both; text-align: center;">Black(red) candle,bearish candle</div><div class="separator" style="clear: both; text-align: center;"><br /></div>
In the next article we will study 'support & resistance' &' Elliot wave'<br />
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Avinash Bongardehttp://www.blogger.com/profile/11492605773113022410noreply@blogger.com0