All World Index vis a vis S&P 500 ! Weekly Chart .

Lupin Daily Chart !

Interesting Educational Charts!

Indiabulls Housing Charts !

Edelweiss Weekly Chart !

Ashok Leyland Chart!

M&M Weekly and Daily Chart !

CNX Auto Daily Chart !

Nifty Views !!!

Above is the Daily chart of Nifty. Its a line chart based on closing price and sometimes this is better to look at as it reduces noise and is rather much cleaner to look at! A few of my observations:

1. In my recent posts I have reiterated whenever the price is far away from the nearest short term MA it tends to consolidate or pullback so as to enable the MA to catch up wit it. So far the sideways and slow moves are a proof of that.
2. The intermediate uptrend is still in play. As you can see the upword channel in which the price structure of HH and HL is still intact.
3. All three key EMA's are bullishily inclined; the 20 above the 50 and the 50 above the 200. And ofcourse the so called Golden Cross !
4. RSI below has come to an OB zone.
5. The MACD Histogram if you notice that intensity of the rally is gettin weaker and the peaks of the histogram are more shallow. Probably the bulls are tiring or simply the rally is losing some of its steam.
6. The overhead resistance or rather the old support turn to new resistance marked in the thin Red band is at 8295 on closing basis. You have 8330-8350 what every one is looking at.

The support below is 8200-8181 which held well during the last week. Real cause of concern is 8150 break with volumes.

Below is the Hourly chart with the micro view of things:

NF Hourly Chart !

What you see below is the Hourly Chart of NF. Its a line chart. There are times when too many gaps and volatile movements make your usual chart (Candlestick with all those wicks and Bar Charts with their tails) a bit of a mess to look at. It pays (literally) to switch to line charts to get a clear picture of the price action. After all Line chart is purely based on close price and its the Close which is very important !

What I want to illustrate from the above chart is;

1. The price action was a bit confusing with gaps and volatility as shown in the small inset pic (candlesticks). However when moved to line chart it clearly showed a small HNS formation complete with RSI Divergence.

2. The down leg shaded in red is also what one would say formation of LH and LL sequence.

If you ever get confused with your Candles and Bars you can switch to the LINE; which would have given you a clear short signal at 7885 with 20 pointer stop (which was tad above the right shoulder).

Therefore I repeat again if you get confused with a messy chart formation try and switch to line chart to get a clear picture !

Cheers !!!

Sugar Stocks..... Will it be a Sweet October???

S&P 500 Views !

Bank Nifty Views!

RCOM A Tale of Two Patterns !

The Weekly Above.....

The Daily Above....

The Hourly Above....

LIC Housing Finance Daily EOD!

A Tale of an H&S and Two Divergences!!!

Divergence!

Just a few days back I had written about divergence. Well it’s a favorite trade set up of mine so thought would make another post out that with illustrations. Two reasons for doing this, one, this is my blog, two, I wanted it in my blog for future reference. As Pring states when the momentum and price are moving in tandem, there isn’t much to read other than assuming we have a healthy trend. It is when the momentum and price get out of sync we have Divergence in hand.

There are 2 basic types of Divergence.

REGULAR DIVERGENCE

1-Price is making higher highs while the indicator is not: Bearish

2-Price is making lower lows while the indicator is not: Bullish

HIDDEN/REVERSE DIVERGENCE

3-Indicator is making higher highs while price is not: Bearish

4-Indicator is making lower lows while the price is not: Bullish

Divergences test your patience, you have to let them develop and then get ready to put in your trade. One of the mistakes us novices make is we jump the gun too soon when we spot Divergence. It should be remembered (I might as well put this in bold font to drive home the point), Divergences in themselves do not signify a reversal or a trend change, they merely gives us an advanced warning of the underlying strength or weakness in the prevalent trend. The real confirmation comes from the Price action itself.

There is a lot one needs to understand about Divergence, than these simple interpretations. The significance of Divergence, the Divergence Trap and Complex Divergence (will add these later). I reiterate again that one should read Pring’s book on Momentum to get better hang of things. Divergences if traded right, can give phenomenal trades, but then you need to spot them, and wait patiently to let them develop, and finally pull the trigger when the PRICE gives the signal!

"Whether you think you can or think you can't, you're right." Henry Ford