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'STATES' of 'MARKET' - forms in which market can existProbably all of you have might have heard of 'states' of 'matter', let me remind you once again "state of matter is one of the distinct forms in which matter can exist" but why am I talking about this stuff it's because the Market also has 'states' of 'market' you can define them in the same way " state of the market is one of the distinct forms in which market can exist". I know many of you can't grasp it now but I can ensure you that by reading the entire article you would surely encounter one of the most striking observations. As we all know fundamental states of matter are:- -> Solid -> Liquid -> Gas So what are the fundamental states of the market? let me recap the definition once again "state of the market is one of the distinct forms in which market can exist". Okay, now I think many of you have figured out the 'states' of 'market', they are the following:- -> Sideways -> Downtrend -> Uptrend Yes, ' states' of 'market' are the trends cause the market can exist only in any form. If I wanted to talk about trends I could have simply described trends but that's not the case cause this publication will establish a relation between the 'states' of 'matter' and 'states' of 'market'. How are 'states' of 'matter' and 'states' of 'market' related? Let me relate them by their properties- -> Relation between Solid and Sideways - Solid The property of solids is they cannot move freely but vibrate due to strong intermolecular force. Solid has a stable and definite shape and requires external force when it's to be molded. - Sideways The property of a sideways market is that in a sideways market price doesn't move freely but consolidates in a range due to strong calls and put writers who bound the price in a range. The sideways market is stable and definite and requires an external buying/selling force to break the range in either direction. -> Relation between Liquid and Downtrend - Liquid The liquid being a fluid tends to flow. The density of liquid a quite high compared to gas hence it requires no external force while flowing downstream but requires a strong force to keep it flowing upwards. The speed of liquid downstream is always greater than upstream due to gravity in action. -Downtrend In a downtrend price also flows down the same as a liquid flowing downstream without any external force. Usually, the price plunges much faster as compared to the rise in price. If somehow a rise is witnessed in a downtrend then it fades out quite fast because to keep the price flowing upward a huge buying force as compared to the selling force is required. This is also the case when liquid flows downstream. -> Relation between Gas and Uptrend - Gas The gas being a fluid tends to flow. The density of the gas is quite low hence it rises naturally but requires external pressure in a downward direction to keep it flowing downwards. Gas has a very large intermolecular space hence its movement in a particular direction is quite slow and random. - Uptrend In an uptrend price naturally rises without any external force. Usually, the price rises much slow as compared to the fall in price. The nature of price in an uptrend is much similar to gas, as price movement in an uptrend is slow and random. Random because in an uptrend price gives more jerks as compared to a downtrend. Phase/Trend Transition:- Sideways <-> Uptrend (transition from sideways to uptrend market and vice-versa) - RSI can be used to identify the transition, in a sideways market RSI usually trades in the band of 40 - 60, when RSI crosses above 60 along with breaking the range indicates the beginning of an uptrend. - We can also term this transition as 'sublimation' cause the solid is changing to gas. - Same for vice-versa just the term would be changed to ' deposition ' as the gas is changing to solid. Sideways <-> Downtrend (transition from sideways to downtrend market and vice-versa) - RSI can be used to identify the transition, in a sideways market RSI usually trades in the band of 40 - 60, when RSI crosses below 40 along with breaking the range indicates the beginning of a downtrend. - We can also term this transition as 'melting' cause the solid is changing to a liquid. - Same for vice-versa just the term would be changed to 'freezing' as the liquid is changing to solid. Uptrend <-> Downtrend (transition from uptrend to downtrend market and vice-versa) - RSI can be used to identify the transition, when a divergence is witnessed in RSI and price chart this indicates the loss in strength of the internal force i.e. exhausting buying interest but still to confirm we could use 20 EMA if the price breaks below moving average with RSI divergence then it's quite possible a beginning of downtrend so what can we do is book our profits. - Downtrend is only confirmed when RSI starts trading below 40 but we can't wait till then and let our profits vanish so as soon as you get an indication book your profits. - We can also term this transition as 'condensation' cause the gas is changing to a liquid. - Same for vice-versa just the term would be changed to 'vaporization' as the liquid is changing to gas. In my prior post, I tried to relate "As above so below" harmony of nature with the market and now "States of Matter" with market trends this is all to make everyone know that 'Stocket' science is equally difficult as 'Rocket' science probably more cause here 'emotion' also comes in play which any other science lacks . Now, answer yourself do you still have a fantasy about 'Rocket' science or 'Stocket' science is enough to fulfill anyone's fantasy and do you know what's the best part of 'Stocket' science? it's everchanging .
NSE:NIFTYEducation
by Chaser30
2
'Shades' of 'Trades' - color of the marketIn this color season let's have an insight into how the market plays 'Holi' with traders with its binary colors. The above line sounds fascinating but it's not let me elaborate a bit more. Yes, the market plays with colors with traders but the market uses only binary colors. Many of you may think of white and black as binary colors, but this is not the case here. The market only uses two primary colors green and red to play with traders but we play with colors only on 'Holi' it seems that markets are very fond of playing with colors so it does probably every trading day it either colors the trader's position page with the green of red. Though we have only two colors in markets which can be divided into four shades which are the following:- -> Light Green - symbolizes a small profit -> Dark Green - symbolizes a big profit ( Trader's Favorite ) -> Light Red - symbolizes a small loss -> Dark Red - symbolizes a big loss ( Hazardous to account ) In this article let's dive into the depth of these colors and the reason for incurring such colors on your position page. -->How to get light green color -- Aimed for steady and regular profits . -> Trader can incur this only if they are consistent and aims for regular profit cause markets aren't trending every day. -> Discipline is the key to consistency. I think many of you have heard of the story of sage Vishwamitra who was meditating for a purpose and Menka was used to break the meditation and misguide him from his path. The same is the case of markets if you are in the market to generate regular profits then you must be disciplined as markets have negative behavior of creating illusions to trap the traders just like Menka . -> I suggest developing a trading system or set of rules on which you are going to take the trade if you want to generate regular and steady profits cause if the system is profitable you will also be profitable. Don't rely on price action on an intraday basis unless you're a champ in the same. -->How to get dark green color -- Aimed for sporadic and occasional profits. -> Though everyone wants profits it's not obvious as said earlier markets aren't trending every day. -> But if you are keen on watching market movements, you could probably catch these sporadic days and generate big profits. -> Fear should reside out to ride big profits. I think why many of us aren't able to ride big profits because of the opulence of loss that has developed fear in our minds due to which we try to book profits early without getting any sign of weakness in our trades. Our mindset says to us "Something is better than nothing". -> To overcome this fear I suggest backtesting your trades which can help you in gaining self-confidence if anyhow you can develop faith in yourself then fear naturally resides. -->Reasons to get light red color -- Quite obvious as a part of the game. -> It's quite obvious if you getting small losses as loss is a part of the trade game. -> There is nothing to be stressed about or to ponder upon these small losses if it comes along with profits as there is no such trading system or trader which only gives or generates profit. -> This usually happens when stop-loss is hit and you must be thankful to yourself that you had placed a stop and accept the small loss. Markets reward traders who admit their errors and change their ways whereas punish traders who are obstinate and won't change. I think everyone must check the reason for each loss they incur if it's due to the system you are following and the system is profitable in long run then the loss is fine but if it's due to your own mistake, learn from it and rectify the same as quick as possible. -->Reasons to get dark red color -- Hazardous and may lead to termination. -> One must avoid these big losses at all costs; otherwise, you may find yourself in a situation where you are unable to pay any costs. -> Most hazardous and may sometimes lead to the termination of your trading journey. -> This usually happens due to the stubborn nature of traders where they don't accept that they are wrong or don't have the guts to book their stop losses. I think why many of us incur big losses because of neglecting the use of system stop-loss. Traders have realized the significance of stop-loss hence they decide on the sl before entering into the trade but what they do is keep sl in mind rather than the system and when the price reaches the sl level they don't have the guts to book the loss due to which small loss turn into a big loss. This is the reason why everybody should place system stop-loss as a computer doesn't have emotion. As stated earlier Markets reward traders who admit their errors and change their ways whereas punish traders who are obstinate and won't change. That means that if the trader does not recognize their mistake and book, the sl market will penalize them with a large loss. I suppose that all of you have got great knowledge of the 'Shades' of 'Trades' and an insight into all outcomes of a trade. And I think that I was able to explain to you how the market also likes to play with color and now the first line doesn't seem to be fascinating but obvious. I hope this 'Holi' market colors you all with dark green, and wish you all a 'Happy Holi'.
NSE:NIFTYEducation
by Chaser30
6
As 'Above' so 'Below' - the harmony of natureIn this real world, there is various philosophy that tries to explain the "As above, so below" harmony is the great law of nature but none can prove this law hence it's still a hypothesis. The law of nature works on everything and the stock market is not untouched by nature. I am not here to give a lecture on this law of nature but to prove how this harmony of nature is preserved in the stock market and to share my research work on 'Stock-et' science which is equally difficult as 'Rocket' science. Many of you have heard of these famous patterns:- 'Head and Shoulder' 'Cup and Handle' 'Rounding Top/Bottom' 'Flag/Pennant' 'Double Top/Bottom' Do you all observe some correlation among them? They all are candlestick patterns that either decide reversal or continuation, if this was your observation then probably you are correct but I wasn't indicating this. Let me explain to you what kind of relationship I was talking about. How do we estimate the target of these patterns? To the target level, we first measure the depth of the pattern i.e. how deep it's below the breakout level. As its depth is below so will the height above. Now, I think you all can draw how this law of nature is respected here in the candlestick pattern or more precisely in the stock market. Let’s have an example to be more sound:- The above chart describes how the CUP pattern works following this law of nature. The stock after the breakout rallied non-stop to attain the e height of +94% which was the depth of the cup pattern. After attaining the target or say 'equilibrium' stock witnessed a jerk, not before that. This proves how the market preserves "As above, so below" harmony, the great law of nature. Still not convinced then look to another example, This is the vice-versa of the previously explained example, here stock attains the depth of -17% i.e. ' equilibrium' after forming a Head and Shoulder pattern with a height of shoulder +17%. This proves how the market preserves "As below, so above" harmony, the great law of nature. Now let's look at this concept with different dimensions i.e. dimensions of mathematics, physics, and chemistry. Don’t be afraid I'm not going to talk about 'rocket' science but 'stock-et' science. [list [ In math, we all have read negative and positive cancels out i.e. (-3+3=0) same in candlestick patterns if the stock has a pattern depth of then the pattern target would be +30% to attain '0' or say 'equilibrium'. In physics, we all have read that negative charges neutralize the positive charge to attain 'equilibrium' same in the stock market. In chemistry, we all have read that all chemical changes occur in nature to attain 'equilibrium' i.e. two elements share their electrons to attain 'stability' (H2O, here two hydrogen molecules share their 1 electron with 6 electrons of oxygen to attain equilibrium) this same happens in markets all market movements occur to attain 'stability'. Generally, people have fantasies about 'Rocket' science but we traders have fantasies about 'Stock-et' science. Please drop comments on whether you have a fantasy for any of the above science. Also, let me know how many of you believe that the stock market doesn't work on speculation but has its science let's call it 'Stock-et' science.
NSE:NIFTYEducation
by Chaser30
2
Education About Bearish Rising WedgeHey there! Lets Learn About bearish rising wedge A bearish rising wedge is a chart pattern that often appears in the stock market and is seen as a bearish signal. It occurs when the price of a stock moves up and down, forming a wedge-like shape that is inclined upwards. The pattern is considered bearish because it signals that the stock's upward momentum is losing steam, and that there may be a price decline in the near future. The pattern is formed when the stock's high and low prices move closer together over time, creating the wedge shape. Investors and traders watch for this pattern as a sign that it may be time to sell their stock, or to short sell the stock, meaning to bet on a price decline. However, it's important to remember that a bearish rising wedge is not a guarantee of a price decline, and it's always wise to consider multiple indicators and factors before making any investment decisions. Here in my example as we can see s and p 500 is forming bearish market structure and forming lower highs and lower lows. In conclusion, a bearish rising wedge is a useful tool for investors and traders to keep an eye on, but it's only one of many factors that should be taken into consideration when making investment decisions like I used another indicator to confirm my analysis. So, keep an eye out for this pattern and stay informed, but always remember to do your own research and make informed decisions. Bye Have a nice day
SP:SPXEducation
by D3ffyDuck
Educational post Rising WedgeA Rising Wedge is a chart pattern in technical analysis that is formed when price moves in a diagonal upwards trend, with both trendlines converging. This pattern is considered bearish because it signals a potential reversal of the current uptrend. As the pattern progresses, the price movement becomes more and more confined, which often results in a downward breakout. This downward move signals a potential trend reversal, and traders often view it as a selling opportunity.
Education
by nawaab001
2
If you are not 'INSIDE' you are 'OUTSIDE' In the stock market, if you are not inside, you are outside. I expect all those reading this article wants to be inside the market. So, if you want to participate in the market then you must develop a deep insight into the key market players i.e. your competitors who drive day to day movement of the market. Key Market Players:- The following are the three types of market participants. ->Retail - general public also called clients ->High Net Worth Investors - commonly known as HNI clients. ->Proprietary Trading - also called 'Pro' are firms. ->Institutions - referred to as trading organizations. Let's dive into the details of each of them listed above . Retail Investors :- They are the general public who invest or trade in the market individually with very small capital as compared to other participants. They are at the bottom of the market food chain when considered individually but in recent few years, the retail participants as a whole have seen a significant rise in numbers. High Net Worth Investors: - They are also an individual but with big sums in their pockets. They have a deeper access to the markets, inside news, and all. They don't participate in day-to-day trading. Proprietary Traders :- Also known as 'Pro 'are those firms/banks which also trade in the daily market with the firm's funds. They are at the middle of the market food chain i.e. above retail but below institutions. Actively participate in daily market movements. Institutional Investors :- They are organizations taking part actively in market movements. They are at the top of the market food chain. They can be further divided into two groups: ->FII (Foreign Institutional Investors): Institutions whose origin is outside India but still they invest in Indian markets. Actively participate in daily market movements. ->DII (Domestic Institutional Investors): Institutions whose origin is India. They are inactive in the derivatives segment. Among the participants listed above Retail, Pro & FII are actively involved in the daily market trading and encourage derivatives segment. We all have seen everyone in markets talking about FIIs that are bearish/bullish on markets but why? The above figure is of FII+Pro & Client correlation with nifty, this describes the reason why the positions of FII are significant. We can draw the following conclusion:- 1. Majority of the time FII is correct to predict the market movement. 2. Clients generally build position against FII and max times have an opposite correlation with market movements. Now, have a look at how the FII and client positions affect the market movement The above figure justifies the correlation. We can draw the following conclusions:- 1. Maximum time FII are net short in nifty whereas clients are net long in nifty. 2. When FII cover their shorts and deploys the longs we see an uptrend but at the same time, the client unwinds long and deploys shorts which are generally against the trend i.e. client likes to drive in opposite direction. 3. And when FII positions converge with the Client there is previous trend exhaustion and the arrival of a sideways market or sometimes a new trend. As of now the index is clearly explained but what about stocks how much significant is FII in stocks? To answer the above question let's take an example of a very famous stock ITC:- The above figure says that FII has increased holding in the interval of Jun2022 - Sep2022 from 12.7% to 44.5% and by the time client has decreased the holding from 44.5% to 14.8%. Does the change in position affect the stock price of ITC? let's have a look Now it's clear that FII have ultimate power because when they started to increase their holding in ITC the price shoot up during this time Public who were holding it for the last 2yrs exited when ITC has just begun to move. Hope the readers had understood the mightiness of FII and the oppositeness of the Public and also have got a deep insight about their competitors . Also, thanks to @biswapatra for requesting me to write an article on this topic. You can also suggest an topic on which you want to have analysis.
NSE:NIFTYEducation
by Chaser30
15
Structural Confluence of Elliot and HarmonicsConfluence doesnt mean some indicators and price action .. confluence conditions can be seen everywhere from structure to entry The above structure shows you confluence with 2 major concepts in trading world HARMONICS and ELLIOT, shows you the possible areas where you could see confluence of both The 3rd wave could some times be BAT pattern or DEEP CRAB pattern in impulse, when it comes to elliot correction you will prob'ly see ABCD pattern in formation. This will give you an idea of how to identify the confluence when you are looking for swing trading Always keep in mind that there will be internal small patterns within the big pattern do not get confused while doing multi TF analysis thinking which pattern to follow, always follow the higher TF pattern.
NSE:BANKNIFTYEducation
by TeamTaurus
3
Trading is a waste of time Trading is a waste of time - until you do this! Welcome back for another exciting video, an educational video, and an eye-opening video for a lot of traders, and I have given it a very, very interesting title that is Trading a Waste of Time. Let's find out in this short video. Recently reading a book called The Best Loser Wins. It's written by Tom Hoggard , he goes by the name of Trader Tom on YouTube .And I urge you to check him out. There are some things that I have learned from his book and I'd like to share it with you. The particular data is of 2019 and these brokers are all located in European Union and, by law they are required to post the failure rates , how many clients are losing money in their market in their accounts. Out of a hundred clients, 89 clients were in a loss. And the situation is same for almost each and every broking houses. So eventually the brokers are making money, but the clients are not. Whenever as a beginner or even a seasoned trader, we are looking at these data and we believe that we are not in this statistical data. We are in the winning percentage in the remaining 10%, but it's not like that for the markets. We are just a statistic. Right? And even if you look at the top 10 broking forms in the world, the majority of people are in a loss. So that really makes us ask this question. Is trading really a waste of time? Are we just wasting our time in trading? And a lot of people, it's a very fine detail and a lot of people might agree with me that, in the initial stages it's really hard to be consistent in making money, right? And I'll discuss the reason with you because this particular reason is not discussed. The social media of Twitter, YouTube, it has all created an image where if you're not doubling your money every month, then you are a loser in the market. But in fact, trading is a very tough profession and it's really hard to make money and initial days protecting your money is one of the biggest tasks in surviving in the market. Protecting yourself from ruin is one of the biggest achievements in trading. So whenever we are starting our journey as a trader, where is our focus? What are the questions we are looking for? What are the things we are usually focused on? , we are on the internet looking for strategies, how to do scalping, how to do seing trading, how to use the indicators, the MACD and RSI, and how we can use different types of breakout indicators, right? These are the focal points of. I remember when I started trading, these are the things I was looking for. A hundred percent strategy, no loss strategy. These are the things that I was looking for initially, but these are usually the wrong answers. You know, in an area where 90% people are in a loss, then you need to ask yourself that. Because it has never been easier to trade because you go back 10 to 15 years, it was not easy to trade. You had to call your broker. And now we have an online trading system where we can just buy and sell stocks at an instant, right? That leads to high liquidity. And high liquidity usually means you can enter and. Very fast and you don't have to pay much for it. And you have all the tools available, especially a tool like Trading View, where you get each and every trading charts, indicators without paying a single penny. So it has never ever been easier to trade. So why are we all still losing money? We are only creating brokerage for our broking firm. This takes us to another and final topic is that in the year 2019, one Forex brokerage firm did an analysis of over 25,000 traders. And over a span of 15 months or 16 months. So that is a long period of time and over five crore trades were analyzed. So it was a very big data to analyze and that would give us a clear picture. So in that analysis it was recorded that out of hundred. , the traders were profitable in 60 of them and they lost money in 40 of them. So this is a very good data, right? Your win, your hit ratio is very high in the total amount of trades. So eventually the data is in your favor, but there's a small catch . When the traders are winning, they're winning 40 points. And when they lose, they lose around 75 points. This is a recipe for disaster. This particular thing created a lot of problems for me in the initial trades during my initial career. And this might be creating a lot of problems for people who are trading for the past one or two years in this high VIX environment because, you know, on paper, on week to week basis, you are winning And, and suddenly there's one particular day when you lose it all and that is the day when it drags your capital back to square one. So this is the biggest reason why it's very difficult for people to manage their trades. Cause it all comes down to how much you win when you win, and how much you lose when you lose. This brings us to the concept of risk . right in this modern area, uh, where option selling and creating spreads and selling naked options has been a very famous thing to do for the past couple of years. That is what happens whenever you're selling options, you have a probability of one 68%. That is a one standard deviation, right? So out of hundred trades you are going to win in 68% of them. But what you do and how you come out of the remaining 30 trades when the situation is not going to go in your favor, that is all going to matter. And that is the crux of thing that makes your journey as a successful trader. Our position in the market is very, very small for the market to know that we even exist or not. If you look at the data, if you just reverse the win and the loss points, even if you're winning only 50% of the times, then also your position is going to be in a net profit. So that's it for the guys. That makes this particular question really interesting. Is trading a waste of time? You're wasting of time, or are you smart enough to realize this thing that the other traders are doing and are in a loss? And what are you doing to improve this position and to improve your survival In this market. So that's it for you guys. I hope I have provided some value in this video, and if you found the video helpful, don't forget to follow me @piyushrawtani Trading View. And if you have any queries, feel free to post it in the comments section. Thank you very much and good night.
NSE:BANKNIFTYEducation
by piyushrawtani
13
'SANTA' of the 'TRADERS'This publication is dedicated to thanking the 'Santa' of the ‘Traders’ i.e. the 'Stock Market'. The lessons given to us as a gift of the market, not only help us to succeed in the stock market but also helps us throughout life. This 25th December i.e. Christmas let’s thank our 'Santa' and have a detailed look at 5 Great Gifts of the Stock Market and thank her for these life-awakening gifts. -> Discipline: The most important teaching in markets is discipline. As the wording of Jim Rohn states “Discipline is the bridge between goals and accomplishment” stock market develops that bridge. The market has its way of teaching and punishing, I think all of us had witnessed its punishment whether in form of not keeping stop loss or not following your trade system. Discipline plays a vital role in an individual’s life. As said by Horace “Rule your mind or it will rule you. ”The disciplined person has the power to rule his mind whereas others lack this ability. -> Patience: Another gem cultivated by markets in our personality and harvested by us throughout life. One of the familiar names of our school time Benjamin Franklin says “He that can have patience can have what he will.” market first teaches this gem to us and then offer us what we wish. We all have at least once missed taking the real profit by not waiting till the target is achieved but leaving the trade in midway though it was moving in our direction the reason is we lack patience and the market gives profit only to eligible ones so, either you be eligible or market will make you fit for it by its way. -> Ability to conquer 3 gateways of hell: According to ‘The Bible’ there are 12 gateways to hell and among them, the most dangerous are Lust, Greed, and Anger. The market helps its students in conquering those strong emotions. The beginner in the stock market has a strong lust for making money very quickly and greed for making lots of money without that kind of effort and when he fails in his motive anger gets born in his personality from where degradation or hell starts. Those few people who still have not left the hands of the market get the knowledge to conquer those emotions throughout their journey in markets. -> Faith in yourself: One of the famous quotes by Ralph Waldo Emerson is “The best lightning rod for your protection is your spine.” market strengthen that spine so that we as its student can withstand any kind of storm in our life. Taking any trade based on your analysis requires self-belief on the early days people hesitate but later they rely on their analysis because the market has taught them self-belief. -> Crush your arrogance: Market is popular in crushing the arrogant guy along with this removing any trace of arrogance in his personality. The famous wording says “Close some doors today. Not because of pride, incapacity, or arrogance, but simply because they lead you nowhere.” market as a kind teacher keep a keen eye on her student for arrogance as she knows that as soon as arrogance arises person starts his fall. All of us had witnessed that whenever we start thinking that we have mastered markets and try to neglect discipline market slaps us badly to awaken us that we are still newbies and still had to learn a lot. I believe these 5 are the most valuable gifts of the market but if you have any gift of the market much valuable in your life please mention it in the comments. Finally, Merry Christmas to all my trader mates. The stock market gives success only to eligible ones so, either you be eligible or the market will make you fit for it in its own way.
NSE:NIFTYEducation
by Chaser30
6
'LEAP' the 'GAP' with the knowledge !!!Definition of a Gap:- - Gap is a space left behind by a script in its price chart. - It is the area of discontinuity price in the respective script. - The reason may be anything but generally it occurs due to sudden changes in the sentiment of the market due to some events or news related to the particular script. Types of Gaps:- 1. Common Gaps - These gaps are not so certain to be considered. They are visible casually and almost every day as we have seen Nifty gaps up or down daily without any event or news. They have a high tendency to be filled (price generally comes back to that gap). 2. Breakaway Gaps - A much more significant gap indicates the start of a new trend. Often seen at resistance or support points for example a stock is trading in a small band bounded with resistance and support and suddenly breaks the band with a gap on either side, now this gap indicates the start of the new trend which is according to the level which is broken. Higher volumes at the gap point further confirm the move. 3. Runaway Gaps - Runaway gaps are quite similar to the above one but, the major difference between them is runaway gaps are seen in the middle of the trend and breakaway gaps are seen before the trend. This gap indicates the strength of the trend and confirms the buying/selling interest in the stock. This gap generally occurs in aggressive buying/selling interest due to news or events. 4. Exhaustion Gaps - These gaps occur at the stage of exhaustion of the trend i.e. the trend is very close to finishing. If spotted correctly it could provide you exit at a very sweet spot. It is a typical sign of trend reversal. It generally occurs after the spike in the price of the stock. This indicates that the market players are not interested to take the position at such a high/low price. The volumes would be unusual in this case. My Observation: Breakaway and Exhaustion gaps can be spotted with help of RSI, if you RSI at choppy levels i.e. 40-60, and a significant gap is formed it is generally a breakaway gap. And if RSI is at extreme levels i.e. 15 or 85 and a significant gap is formed it is usually an exhaustion gap.
NSE:NIFTYEducation
by Chaser30
5
Technical Market Indicatorslet us understand what the different types of TECHNICAL MARKET INDICATORS in brief 😎Trend indicators are stronger than any other technical market indicator:- A market trend is a tendency of a stock market to move in a particular direction over time These trends are classified as secular trends for long time frames, primary trends for medium time frames, and secondary trends lasting short times Trend indicators are always lagging indicators as a trend has to establish first, before it can be measured 😎 Breadth indicators are designed to confirm a price action or an existing trend Breadth indicators are measuring the overall strength of a price action or an existing trend by analyzing the proportion of the overall stocks or volume that are participating in the market’s up or down move Some measures of market breadth involve the volume of rising stocks compared to the volume of falling stocks 😎 Measure the investing behavior of certain trader groups Contrarian market indicators attempt to measure the overall bullish or bearish attitude towards the market among traders and investors (market sentiment) or tracking down the investing behavior of smart money and dumb money Those indicators lead and/or confirm price actions Somehow they are a mixture between trend- and breadth indicators and oscillators 😎 Oscillators are leading indicators as they lead a price move Oscillators are leading indicators as they lead a price move They move above and below a centerline (center oscillators) or are banded (banded oscillators) between two extreme values The banded oscillators are designed for discovering shortterm overbought or oversold conditions. As the value of the oscillator approaches the upper extreme band the stock market is deemed to be overbought, and as it approaches the lower extreme it is deemed to be oversold ALL THESE INDICATORS HAVE THEIR OWN ADVANTAGES AND COMPLICACY I have tried to share details in bried hope you enjoyed reading it disclaimer - shared as read
NSE:TATAMOTORSEducation
by sankhyainvestments
Bullish and Bearish Harami candles concept Educational Post Bullish Harami Bullish Harami is candle stick pattern which shows counter attack by bull on bear entering the support zone. Significance of candle stick pattern is at support level of charts. Bullish(Green) candle should gap up from close of bearish(Red) candle and close should be above the median of bearish(red) candle with volume. Bearish Harami Bearish Harami is candle stick pattern which shows counter attack by Bear on bulls entering the resistance zone. Significance of candle stick pattern is at resistance level of charts. Bearish(red) candle should gap down from close of bullish(green) candle and close should be below the median of bull(green) candle with volume. If you like the post,Please follow,like and share it. Happy Trading!!!
NSE:NIFTYEducation
by Darshan_Panchal
How the hammer candle stick pattern is formed ??Educational Post Hammer candle stick pattern is important pattern shows counter attack of bulls. This pattern has significance when price is near crucial support or near long term moving average. Hammer shows that bears are unable to beat the bulls and not able to make close in bulls territory. Bulls also shows their presence when price enters in their territory. Please like, share and folloew for more such educational posts. Have a Happy Trading :) !!!
TVC:SILVEREducation
by Darshan_Panchal
'SWING' your losses into profits with 'SWING' trading strategiesIn prior posts, we have covered some great teachings about the market and, in this post, we will elaborately cover the swing trading strategies. Let's start !! ->Definition of swing trading -: Swing trading is generally referred to as a trade carried out for a short time. Swing traders do not wait till the price action opposes their direction, they are known for their prior moves. They are good at identifying the shifts in market trends with the help of various techniques which are explained throughout this idea. Swing trading strategies include the use of Fibonacci, Bollinger Bands, Channel Trading, Moving Average, MACD crossover, and better understanding of chart patterns like Head & Shoulder, Flag, and Triangle Patterns. We will discuss chart patterns, later on, now let's focus on the indicator strategies. - >Swing trading strategies -: ->Fibonacci Retracement: The stock price tends to retrace, and swing traders use this retracement as an opportunity to enter a trend. The retracement levels could be identified using Fibonacci Retracement, all you need is to identify the prior trend and if the price retraces to the 0.618 level and again resumes the trend jump on it and ride the position till it reaches 0.236 level. ->Bollinger Bands : Most probably, the stock price tries to move in the Bollinger band, which is used by swing traders to initiate and terminate their position. Firstly you need to identify the major trend, let's suppose it's bearish than when the price reaches the upper bound and there is a formation of a bearish candle you could initiate a short position also when a bearish candle is formed at the median, there also you can initiate a short position. ->Channel Trading: Sometimes, stock price trades in a channel now this channel is used by swing traders i.e. when the trend is bullish they try to take long position at the lower range of channel and book partial profits on median and wait for the price to reach the upper end. ->Moving Average: Here traders identify the major trend and take position according to it, with help of crossovers they generally prefer 10DEMA crosses 20DEMA. ->MACD : This is a simple strategy where the trades are initiated when there is MACD crossover but the cross should correlate with the trend. My Observation-: These strategies could be more accurate if used to trade with the trend, i.e. if the stock is in an uptrend only take positions for a positive signal and just avoid negative signals. Another basic strategy is to take a position when a script moves above the swing high or below the swing low, here the only thing to ponder is to manage your risk. Don't take over positions understand your risk appetite then take positions.
NSE:NIFTYEducation
by Chaser30
20
Thanks to the greatest teacher 'THE MARKET' !!!This publication is dedicated to thanking one of the greatest and strict teacher the ‘Stock Market’. The lessons of the market not only help one to succeed in the stock market but also helps throughout life. This 5th September i.e. Teacher’s day let’s have a detailed look at 5 Great Learnings of Stock Market and thank her for these life-awakening learnings. -> Discipline: The most important teaching in markets is discipline. As the wording of Jim Rohn states “Discipline is the bridge between goals and accomplishment” stock market develops that bridge. The market has its way of teaching and punishing, I think all of us had witnessed its punishment whether in form of not keeping stop loss or not following your trade system. Discipline plays a vital role in an individual’s life. As said by Horace “Rule your mind or it will rule you. ”The disciplined person has the power to rule his mind whereas others lack this ability. -> Patience: Another gem cultivated by markets in our personality and harvested by us throughout life. One of the familiar names of our school time Benjamin Franklin says “He that can have patience can have what he will.” market first teaches this gem to us then offer us what we wish. We all have at least once missed taking the real profit by not waiting till the target is achieved but leaving the trade in midway though it was moving in our direction the reason is we lack patience and the market gives profit only to eligible ones so, either you be eligible or market will make you fit for it by its own way. -> Ability to conquer 3 gateways of hell: According to ‘The Bhagavad Gita’ there are 3 gateways to hell i.e. Lust, Greed, and Anger. The market helps its students in conquering those strong emotions. The beginner in the stock market has a strong lust for making money very quickly and greed for making lots of money without that kind of effort and when he fails in his motive anger gets born in his personality from where degradation or hell starts. Those few people who still have not left the hands of the market get the knowledge to conquer those emotions throughout their journey in markets. -> Faith in yourself: One of the famous quotes by Ralph Waldo Emerson is “The best lightning rod for your protection is your own spine.” market strengthen that spine so that we as its student can withstand any kind of storm in our life. Before taking any trade based on your analysis requires self-belief on the early days people hesitate but later they rely on their analysis because the market has taught them self-belief. -> Crush your arrogance: Market is popular in crushing the arrogant guy along with this removing any trace of arrogance in his personality. The famous wording says “Close some doors today. Not because of pride, incapacity, or arrogance, but simply because they lead you nowhere.” market as a kind teacher keep a keen eye on her student for arrogance as she knows that as soon as arrogance arises person starts his fall. All of us had witnessed that whenever we start thinking that we have mastered markets and try to neglect discipline market slaps us badly to awaken us that we are still newbies and still had to learn a lot. According to me, these 5 are the most valuable learnings of markets but if you have any learning of market much valuable in your life please mention in comments. Also, comment which subjects teacher in your school life is as strict as the stock market, for me its 2nd language(Hindi) teacher. Finally great thanks to 'The Market' for these great teachings. The stock market gives success only to eligible ones so, either you be eligible or the market will make you fit for it in its own way.
NSE:NIFTYEducation
by Chaser30
15
Rounding Bottom PatternThe Rounding Bottom is a long-term reversal pattern that is best suited for weekly charts. It is also referred to as a saucer bottom, and represents a long consolidation period that turns from a bearish bias to a bullish bias. 1. Decline: The first portion of the rounding bottom is the decline that leads to the low of the pattern. 2. Low: The low of the rounding bottom can resemble a “V” or "U" bottom, but should not be too sharp and should take a few weeks to form. 3. Advance: The advance off of the lows forms the right half of the pattern and should take about the same amount of time as the prior decline. 4. Breakout: Bullish confirmation comes when the pattern breaks above the reaction high that marked the beginning of the decline at the start of the pattern. To trade this pattern look for the neckline that is marked on the chart. Once the price breaks through and a candle closes above the neckline, you can then enter the market with a buy order. 5. Volume: Volume levels are not too important on the decline, but there should be an increase in volume on the advance and preferably on the breakout. 6. Target: Add the height of the rounded bottom to the breakout point for an estimated upside target. 7. Stop Loss: The stop loss is placed below the neckline of the pattern.When the price trades below this point, there is less chance of this pattern’s functionality. It’s better to exit the market. The rounded bottom are reversal patterns which identify the completion of the trend and indicate a possible reversal point on price chart. The rounded bottom signals that the existing downtrend is about to finish and the possibility of an uptrend to commence. It resembles a clear “U” image.
NSE:AGARINDEducation
by MandeepSinghKohli
7
'SWING' your profits with 'SWING' trading strategies !!! In a series of educational posts we have covered so far the candlestick patterns and moving average crossovers, in this post we will elaborately cover the swing trading strategies. Let's start !! ->Definition of swing trading - : Swing trading is generally referred to a trade which is carried out for a short duration of time. Swing traders do not wait till the price action opposes there direction, they are known for there prior moves. They are good in identifying the shifts in market trend with the help of various techniques which is explained throughout this idea. Swing trading strategies include use of Fibonacci, Bollinger Bands, Channel Trading, Moving Average, MACD crossover and better understanding of chart patterns like Head & Shoulder, Flag, Triangle Patterns. All the above said patterns has been covered in the previous ideas on continuation patterns. ->Swing trading strategies -: ->Fibonacci Retracement: Stock price has an tendency to retrace, and swing traders uses this retracement as an opportunity to enter in a trend. The retracement levels could be identified using Fibonacci Retracement, all you need is to identify the prior trend and if price retraces till 0.618 level and again resumes the trend jump on it and ride the position till it reaches 0.236 level. ->Bollinger Bands : Most probably, stock price tries to move in Bollinger band, which is used by swing trader to initiate and terminate there position. Firstly you need to identify the major trend, let suppose it's bearish then when the price reaches the upper bound and there is a formation of bearish candle you could initiate a short position also when a bearish candle is formed at median, there also you can initiate a short position. ->Channel Trading: Sometimes, stock price trades in channel now this channel is used by swing traders i.e. when the trend is bullish they try to take long position at lower range of channel and book partial profits on median and wait for price to reach upper end. ->Moving Average: Here traders identify the major trend and take position according to it, with help of crossovers they generally prefer 10DEMA crosses 20DEMA. ->MACD: This is a simple strategy where the trades are initiated when there is MACD crossover but the cross should corelate the trend. My Observation-: These strategies could be more accurate if used to trade with trend, i.e. if the stock is in uptrend only take positions for positive signal and just avoid negative signals. Another, basic strategy is to take position when a script moves above swing high or below swing low, here the only thing to ponder is to manage your risk. Don't take over position understand your risk appetite then take positions.
NSE:NIFTYEducation
by Chaser30
"Crossover" your limits with "Crossovers" !!!!Through series of educational posts we have got an elaborate knowledge of candlestick pattern which include both reversal and continuation patterns and this post is somewhat different from candlestick it's all about moving average crossovers. General concept of crossover is that a fast moving average surpasses slow one in any directional trend and could help you be in right side, A moving average crossover occurs when two different moving average lines cross over one another, Because moving averages are a lagging indicator, the crossover technique may not capture exact tops and bottoms. But it can help you identify the bulk of a trend. A moving average crossover system helps to answer these three questions: Which direction might the price be trending (if at all)? Where might be a potential entry point for a trend trade? When might a trend be ending or reversing? All you have to do is plop on a couple of moving averages on your chart, and wait for a crossover. If the moving averages cross over one another, it could signal that the trend is about to change soon, thereby giving you the chance to get a better entry. By having a better entry, you have the chance to have better reward. -> Short term crossovers: it includes 5 DEMA crossover 20DEMA , this crossover is for daily timeframe i.e. for short term traders 5DEMA CROSS ABOVE 20DEMA although some move was left out but then also the return was splendor NOTE: crossover give signal only on conformation so some move could be left out. 5DEMA CROSS BELOW 20DEMA -> Long term crossovers: it includes some important crossovers i.e. Golden and Death crosses GOLDEN CROSS: here major moving average crosses each other i.e. 50DEMA cross above 200DEMA it signifies major uptrend in large time frame though we have seen major fall in metal sector but still they are golden cross period DEATH CROSS: here major moving average crosses each other i.e. 50DEMA cross below 200DEMA it signifies major downtrend in large time frame the major fall in nifty was predicted by me earlier with help of this cross In summary, moving average crossovers are helpful in identifying when a trend might be emerging or when a trend might be ending. The crossover system offers specific triggers for potential entry and exit points. These triggers should be confirmed with a chart pattern or support and resistance breakouts My Observation :- short term moving average crossovers could be confirmed with RSI i.e. if RSI is greater than 50 uptrend possible and if less than 50 downtrend possible if it is not the crossover could be false in that case wait for conformation. long term moving average crossovers could be confirmed with RSI i.e. if RSI is greater than 60 uptrend possible and if less than 40 downtrend possible if it is not the crossover could be false in that case wait for conformation.
NSE:NIFTYEducation
by Chaser30
4
'CONTINUE' trading with 'CONTINUATION' pattern_2nd Edition_!!!In previous idea of continuation pattern, which comprise explanation of some continuation patterns like triangles, flags and pennants it was stated that in next post I'll be back with patterns such as head & shoulder , double top and bottoms and we're back. As we have discussed in the previous section, that market can be either in trending phase or in a range-bound phase. No trend generally lasts forever in the market. After prolonged or medium or shorter duration up and downtrend, the market often reverses and a move starts in the opposite direction of the prior move. Often we find that well defined geometrical patterns are formed in the chart which provides good indication of price reversals. These patterns are called reversal classical chart patterns. When they are formed as a bullish reversal pattern they are said to be part of accumulation. On the other hand if they are formed at the top of a price move just before bearish reversal, then they are part of distribution. However, a geometrically shaped consolidation does not necessarily mean price reversal. Often price resumes the erstwhile trend post the consolidation move. These are called continuation classical chart pattern. We will discuss about few of the classical chart patterns in the following section. -> Head & Shoulder -: Head and Shoulder pattern is a bearish reversal pattern. This pattern appears after an uptrend. This pattern is formed with three consecutive tops with middle one being higher than the other two. The middle top is called the head and the two side peaks are called the shoulders. On joining the intermediate troughs, we get the neck-line. On ultimate break below the neckline, usually a short trade is taken with a stop-loss above the top of the nearest shoulder. The target is usually considered as the distance between the neckline and head, projected from the point of break. If the volume in the down leg of the right shoulder is on the higher side and break happens with high volume, the conviction is on the higher side for the reversal. An Inverse Head and Shoulder is just mirror image of the Head and Shoulder pattern. This should appear after a sustained down trend, the rule of stop loss and target are similar. This often acts as a very effective bullish reversal pattern. -> Double Tops and Bottoms -: These chart patterns are well-known patterns that signal a trend reversal – these are considered to be one of the most reliable patterns and are commonly used. These patterns are formed after a sustained trend and signal to chartists that the trend is about to reverse. These patterns are created when price movement tests support or resistance levels twice and is unable to break through. These patterns are often used to signal intermediate and long-term trend reversals. Double top: Double bottom: -> Mechanism of Continuation Pattern -: Continuation patterns provide some logic to the price action. By knowing the patterns, a trader can create a trading plan to take advantage of common patterns. The patterns present trading opportunities that may not be seen using other methods. Unfortunately, simply because the pattern is called a "continuation pattern" does not mean it is always reliable. A pattern may appear during a trend, but a trend reversal may still occur. It is also quite possible that, once we have drawn the pattern on our charts, the bounds may be slightly penetrated, but a full breakout does not occur. This is called a false breakout and could occur multiple times before the pattern is actually broken and a continuation or a reversal occurs. Rectangles, due to their popularity and easy visibility, are highly susceptible to false breakouts. Patterns can also be subjective, as what one trader sees is not what another trader sees, or how another trader would draw or define the pattern in real time. This is not necessarily a bad thing, as it can provide traders with a unique perspective on the market. It will require time and practice for the trader to develop his or her skill in finding patterns, drawing them and formulating a plan on how to use them. My Observation -: These geometrical patterns are formed after a trend in that particular stock, it generally resumes the previous trend after being out of the pattern but some times it reverses the previous trend hence, it is advised to wait for the conformation to play the pattern. And we can use RSI for conformation i.e. if you are seeing pattern breakout then just check if RSI is greater than 60 and if not than the chances of fakeout is more also in case of breakdown just check if RSI is below 40 else it can reverse. #Enjoy_trading
NSE:NIFTYEducation
by Chaser30
'CONTINUE' trading with 'CONTINUATION' pattern !!!!Market can be either in trending phase or in a range-bound phase. No trend generally lasts forever in the market. After prolonged or medium or shorter duration up and downtrend, the market often reverses and a move starts in the opposite direction of the prior move. Often we find that well defined geometrical patterns are formed in the chart which provides good indication of price reversals. These patterns are called reversal classical chart patterns. When they are formed as a bullish reversal pattern they are said to be part of accumulation. On the other hand if they are formed at the top of a price move just before bearish reversal, then they are part of distribution. However, a geometrically shaped consolidation does not necessarily mean price reversal. Often price resumes the erstwhile trend post the consolidation move. These are called continuation classical chart pattern. We will discuss about few of the classical chart patterns in the following tutorial. -> Triangles -: Triangles are one of the most well-known chart patterns used in technical analysis. The three most common types of triangles, which vary in construction and implications, are Symmetrical Triangle, Ascending Triangle and Descending Triangle. These chart patterns are considered to last anywhere from a couple of weeks to several months. These are areas of consolidations after a trending move and are generally continuation patterns, i.e. the erstwhile trends resumes after the breakout. However, in certain cases they act as reversal patterns. They can appear both in up-trend and down-trend. -Symmetrical Triangle -: This kind of triangle is formed when the price of the script consolidate in range which is getting narrower with the time, i.e. the sequence of lower highs and higher lows. -Ascending Triangle -: This kind of triangle is formed when the price of the script consolidate in range which lower bound is getting higher with a stiff upper bound, i.e. the sequence of higher lows but almost equal highs. -Descending Triangle -: This kind of triangle is formed when the price of the script consolidate in range which higher bound is getting lower with a stiff bottom bound, i.e. the sequence of lower highs but almost equal lows , it is juxtapose of ascending triangle. -> Flags & Pennants -: These two short-term chart patterns are continuation patterns that are formed when there is a sharp price movement followed by a generally sideways price movement. The patterns are generally thought to last from one to three weeks . They can appear both in up-trend and down-trend. Flag : Pennant: -> Rectangles -: Often there will be pauses in a trend in which the price action moves sideways, bound between parallel support and resistance lines. Rectangles, also known as trading ranges, can last for short periods or many years. This pattern is very common and can be seen often intra-day, as well as on longer-term time frames. ->Mechanism of Continuation Patterns -: Continuation patterns provide some logic to the price action. By knowing the patterns, a trader can create a trading plan to take advantage of common patterns. The patterns present trading opportunities that may not be seen using other methods. Unfortunately, simply because the pattern is called a "continuation pattern" does not mean it is always reliable. A pattern may appear during a trend, but a trend reversal may still occur. It is also quite possible that, once we have drawn the pattern on our charts, the bounds may be slightly penetrated, but a full breakout does not occur. This is called a false breakout and could occur multiple times before the pattern is actually broken and a continuation or a reversal occurs. Rectangles, due to their popularity and easy visibility, are highly susceptible to false breakouts. Patterns can also be subjective, as what one trader sees is not what another trader sees, or how another trader would draw or define the pattern in real time. This is not necessarily a bad thing, as it can provide traders with a unique perspective on the market. It will require time and practice for the trader to develop his or her skill in finding patterns, drawing them and formulating a plan on how to use them. My Observation -: These geometrical patterns are formed after a trend in that particular stock, it generally resumes the previous trend after being out of the pattern but some times it reverses the previous trend hence, it is advised to wait for the conformation to play the pattern. In the next publication I'll try to elaborately explain continuation patterns like - head & shoulder, double top & bottom, wedge; Till then, #Enjoy_trading
NSE:NIFTYEducation
by Chaser30
4
Diamond Top Formation Educational PostDiamond Top Formation A diamond top formation is a technical analysis pattern that often occurs at, or near, market tops and can signal a reversal of an uptrend. It is so named because the trendlines connecting the peaks and troughs carved out by the security's price action form the shape of a diamond. KEY TAKEAWAYS 1. A diamond top formation is a chart pattern that can occur at or near market tops and can signal a reversal of an uptrend. 2. A diamond top formation is so named because the trendlines connecting the peaks and troughs carved out by the security's price action form the shape of a diamond. 3. Technicians suggest that to calculate the potential move, once the neckline of a diamond formation is broken, the trader should calculate the distance between the highest and lowest point in the diamond formation and add it to the breakout point. Key Characteristics Most diamond top formations will exhibit the following characteristics: 1. The security's price should be trending upward. 2. Price action should then start resembling a broadening pattern, where the peaks are higher and the troughs are lower, at the onset. 3. Subsequently, the price action changes to where the peaks are lower and the troughs are higher. 4. Connecting the peaks and troughs will form a diamond, usually tilted to one side.
Education
by nawaab001
'Inside' Story of 'Inside' Candle !!!! -> Definition of Inside Candle As the name suggests, an inside bar chart pattern engulfs the inside of a large candle, some call it a mother bar. It’s a pattern that forms after a large move in the market and represents a period of consolidation. The inside bar pattern can be a very powerful price action signal if you understand how to trade it properly. Matching lows and highs are acceptable, however, the inside bar’s range must not be outside of the mother candle by even 1 point. -> Facts about Inside Candle Inside bar pattern within the trading range (or shadow) of the preceding bar. It is at least a two candlestick formation. Mother candlestick can be either bullish(green) or bearish(red). The inside bar chart pattern can be bullish or bearish. Inside bar setup. -> Procedure to trade Inside Candle Entering: – When the price action completes an inside candlestick chart pattern, you should mark the low and high of the Inside Bar consolidation range. These two levels are used to trigger a potential trade. Remember, the inside candle clues us into the eventual breakout and likelihood of a continuation outside the range in the direction of the break, however, it doesn’t give us information about the direction of the breakout through the range, prior to the actual move. In simple terms, if the price action interrupts the range upwards, then you should go long. If the price action breaks the range downwards, then you should trade the short side. Exiting: – Projecting the potential move with Inside Bar Breakouts can be challenging. Often inside bar trades can lead to a prolonged impulse move after the breakout, so employing a trailing stop loss after the price has moved in your favor is a smart trade management strategy. Stop Loss: – In either case (If you are Long or short), your stop should be located below the bottom of the range, as stated in the picture below. There can be a buffer of 1% below the range. -> Inside Candle helps to identify change in trend The inside bar candlestick pattern is such a valuable tool because it tells us that the market is not as bullish or bearish as it was in the preceding period. Being able to identify periods of market expansion and contraction will help any trader improve their odds of finding a winning trade because we know from history that expansion and contraction can only last so long. When either of those market phases ends, the resulting moves can be explosive! My OBSERVATION -> It is more effective if used with RSI i.e. when RSI is greater then 70 and inside candle is formed , that spot is best for shorting, and if RSI is less then 30 and inside candle is formed , that spot is best to go long.
NSE:NIFTYEducation
by Chaser30
27
Educational Post Ascending Channel**** Educational Post: ASCENDING CHANNEL An ascending channel is the price action contained between upward sloping parallel lines. Higher highs and higher lows characterize this price pattern. Technical analysts construct an ascending channel by drawing a lower trend line that connects the swing lows, and an upper channel line that joins the swing highs. The pattern’s opposite counterpart is the descending channel. KEY TAKEAWAYS 1. An ascending channel is used in technical analysis to show an uptrend in a security’s price. 2. It is formed from two positive sloping trend lines drawn above and below a price series depicting resistance and support levels, respectively. 3. Channels are used commonly in technical analysis to confirm trends and identify breakouts and reversals. ****Trading the Ascending Channel 1. Support and Resistance: Traders could open a long position when a stock's price reaches the ascending channel’s lower trend line and exit the trade when the price nears the upper channel line. A stop-loss order should be placed slightly below the lower trend line to prevent losses if the security’s price abruptly reverses. 2. Breakouts: Traders could buy a stock when its price breaks above the upper channel line of an ascending channel. 3. Breakdowns: Before traders take a short position when price breaks below the lower channel line of an ascending channel, they should look for other signs that show weakness in the pattern.
Education
by nawaab001