Thenali_Views

How to Identify the trend in the Stock? - Education

Education
NSE:FEDERALBNK   FED BANK
Hi Guys,

Welcome to Thenali Views?

Today we are going to learn how to identify the trend?

What is Trend in the Market?

In layman language: Stock moves higher and higher its uptrend or Stock moves lower and lower in downtrend.

Then....

What is a Range Bound or Consolidation?

When the stock moves in a within range for period time its consolidation.

But you look at broader picture of the market, it's has 4 Stages....

Stage 1 : Accumulation:

This stage occurs after a decline in price and looks like a range market in a downtrend.

Its Look things for:

1. Occurs after the price fallen over a period of last 4 months to 5months or more in daily time frame.
2. It looks like a range market with support and resistance in a downtrend.
3. 200 days Moving Average looks flat.
4. The Price move back and forth around 200 days moving average.

Stage 2: Advancing:

After the price breaks out the accumulation phase, its move to advancing phase (an Uptrend)

In this Stage:

1. Its usually occurs after the price breaks out the accumulation phase.
2. Here its a important thing... the price forms Higher Highs and Higher Lows.
3. Short term MA (Ex. MA50 or MA20) is above MA200.
4. MA200 pointing higher and price of script is higher above MA200.

Stage 3: Distribution:

Distribution usually occur after advancing phase (Uptrend) and its look like a consolidation.

In this Stage:

1. Its usually occur when the price have risen over the past 6 months or more
2. Its looks like a long period of consolidation during uptrend
3. The 200MA tends to flatten out after price decline
4. The price tends to move back and forth around MA200.

Stage 4: Final Stage: Declining:

After the price breaks as result of distribution phase, its goes to declining stage ( Downtrend).

In this Stage:

1. It usually occurs after the price breaks the distribution zone.
2. Here its important...the price forms a series of Lower High and Lower Lows.
3. Short term MA (Ex. MA50 or MA20) are below long term MA (200MA)
4. MA200 is pointing lower and price below the MA200.

So Guys in this we have learned the stages of trend in the market.
In this chart we can analysis the trend.

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