The Trend in the Bend - EMA + Price ActionKPIT Technology is one of the leading IT shares in India. I had also identified and posted it just before its recent rally.
Here is a more detailed run through of the price action.
It demonstrated a very clear support at EMA 50 level and a fairly clear Resistance level.
This was further supplemented with a double bottom pattern and rising volume levels - Clear entry signals
Also, knowing that the EPS of the company has been consistently growing without unreasonable price increase, helps to strength the conviction.
I personally find EMA very helpful for pullback levels and they are fairly effective in a healthy upward trend.
EMA is basically the Exponential Moving Average of the share price over a period of days.
Traders use various EMA levels for identifying bounce back levels and pullback zones for re entry.
Normally EMA 9,21 are used for short term trades, which basically means exponential average over a period of 9 days and 21 days.
Furthermore, EMA 21, 50, 100, 200 are major ones I prefer to keep a track of.
EMA might not be very helpful in a sideways market, but when combined with a clear Support - Resistance level and Volume Analysis, it can be a helpful tool.
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