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Moving Averages

Biocon - A case study for Long Term InvestmentThis is the monthly chart. Recently Biocon broke the support levels of 360-365 and this resulted in a major 10% fall upto 330 levels. For long term investors, the question that arises here is - Where is the next buying zone? From which price levels the stock will show a bounce back? Here we will learn the use of EMA or Exponential Moving Average. Every stock respects a different exponential moving average and hence a single EMA cannot be used as a common standard. From the historical monthly chart, we can observe that the stock has been respecting the 50 day EMA (more than 3 times) in the Monthly Timeframe for the past 8 years. Now the stock is coming down to the 50EMA support having broken the 20EMA support zone. Thus we can initiate a buy around 300 levels, where the 50 day EMA support exists. When to buy? We should buy only when we receive multiple confirmations. Those should be: a. Stock respects the 50 EMA support. b. Stock forms a bullish hammer or bullish harami candle from the 50 EMA support. Only when these two conditions are satisfied, we can initiate a BUY on this stock.
NSE:BIOCONEducation
by tksthathachari
5
How to Execute the Trend trading system?Look for Low risk, High reward, and High Probability setups. – Richard Weissman Scenario Many traders get destroyed by fighting the trend, insisting that the market is due to reverse itself or they try to chase the market. They may try to catch short-term countermoves in hopes of making a few quick points, or they may always look to catch tops and bottoms in hopes of capturing the big moves. All these traders end up trading against the longer-term trend and against the odds. How to find low risk, high reward, and high probability setups? Use of Trend Following indicators for High Probability trading A-Use of Moving average. If you just jump into trades because the market is trending, you will be guilty of chasing the market. You have to remember that the market will never go in one direction nonstop, the market typically congests or retraces after a strong move. When the market is trending and you are looking for a place to get in, wait for it to retrace to one of the moving averages or trendlines. When the price is just riding on the moving average or trendline, your downside risk is smallest because you know you will be out as soon as it breaks the line. B-Use of ADX (only for conformation) The ADX does not tell you the direction of the trend; it only tells you if there is a trend and measures how strong it is. On its own, the ADX lags price action and is not a great indicator, and so one should not use it to trigger trades. Instead, it should be used as a way to get confirmation of whether the market is trending or choppy and how strong it is . The level between 20 and 30 is considered neutral. The higher the level, the stronger the trend. When it is rising, one should trade only in the direction of the trend. When the ADX is below 20, you can consider the market to be choppy and range-bound, and a trending system will not work well, resulting in whipsaws. Things to Remember while Trading with the Trend 1. Know what the trend is. 2. The best trades are made in the direction of the trend. 3. Assume that the main trendline or moving average will hold. 4. The longer the moving average is, the better it defines the trend. 5. Wait for the pullback. 6. Don’t chase the market. 7. Don’t fight the market. 8. Even in the strongest trends there should be some retracement. 9. The closer the market is to the trendline, the better the risk/reward ratio is. 10. Use ADX to determine the strength of the trend. 11. Higher the level of ADX, the stronger the trend, below 20 consider the market to be choppy 12. Hold trades longer in a strong trend. 13. Wait for confirmation of a trendline breaking before reversing position. 14. Know where the Support levels are. 15. Place stops outside the Support levels. Closing Words- A successful trader will trade primarily in the direction of the major trend, waiting for retracements to get in.
NSE:WIPROEducation
by Indrajit08
61
200 (DAILY) SIMPLE MOVING AVERAGEThe 200-day simple moving average (SMA) is considered a key indicator by traders and market analysts for determining overall long-term market trends. The indicator appears as a line on a chart and meanders higher and lower along with the longer-term price moves in the stock, commodity, or whatever instrument that is being charted. The 200-day SMA seems, at times, to serve as an uncanny support level when price is above the moving average or a resistance level when price is below it. As a very long-term moving average, the 200-day SMA is often used in conjunction with other, shorter-term moving averages to show not only the market trend but also to assess the strength of the trend as indicated by the separation between moving average lines. For example, comparing the 50-day SMA and 200-day is relatively common. When moving average lines converge, this sometimes indicates a lack of definitive market momentum, whereas the increasing separation between shorter-term moving averages and longer-term moving averages typically indicates increasing trend strength and market momentum It is possible that there is also something of a self-fulfilling prophecy aspect to the 200-day SMA; markets react strongly in relation to it partially just because so many traders and analysts attach so much importance to the indicator. It is acting as Dynamic Support currently.
COINBASE:ETHUSDEducation
by TraderLeVeR
Identify Trends Using Moving Average and Trade accordinglyMoving Average (MA) is a widely used technical indicator that smooth's out price trends by filtering out the “noise” from random short-term price fluctuations. The most common applications of moving averages are to identify trend direction and to determine support and resistance levels. When asset prices cross over their moving averages, it may generate a trading signal for technical traders. (In this chart when red line makes a cross over the green line on the Upside a Buy signal is generated, similar when the red line makes a cross over the green line to the Downside a Sell signal is generated) Moving Average Length: Common moving average lengths are 10, 20, 50, 100 and 200. These lengths can be applied to any chart time frame (one minute, daily, weekly, etc.), depending on the trader's time horizon. Here in this chart I have used (9,21) length to identify short term trend. Now, lets talk about how to prevent our self from taking trade on false cross over (Here in this chart what i observed is-MA tends to provide more accurate signals when the cross over happen in either upward or downward direction, while a flat crossover as spotted within the circle gave a false move and an indication of a sideways trend please do like, share and comment if you have any suggestion for me Thanks
NSE:SBINEducation
by N50-ANALYST
6
HOW TO BUY STOCKS USING MOVING AVERAGEMoving average is the most common indicator in technical analysis also be the most important indicator, as it serves as the foundation of countless others. 1) What is a moving average? Moving average (MA) is a simple technical analysis tool that smooths out price data by creating a constantly updated average price. The average is taken over a specific period of time like 10, 20, or 50 days, or any time period as suitable. The indicator is known as a ‘moving’ average, since its value keeps changing as the data keeps changing over time. I have used a band of 20 DMA. Here’s an example. Say the closing prices of ITC for the last 5 trading days are: Closing prices Day 1: Rs. 215 Day 2: Rs. 220 Day 3: Rs. 222 Day 4: Rs. 226 Day 5: Rs. 239 In this case, the moving average of ITC for a 5-day period is calculated like this. = (Day 1 price + Day 2 price + Day 3 price + Day 4 price + Day 5 price ) ÷ 5 days = (Rs. 215 + Rs. 220 + Rs. 222 + Rs. 226 + Rs. 239) ÷ 5 days = Rs. 224. When used appropriately, they provide easy insight into a trend’s direction, its magnitude, support and resistance. Works magically, for those who depend on support and resistance strategies to generate entry points. However, for those who prefer to trade price reversals, using moving average crossover strategies is perfectly viable as well. 2) How to buy stocks using moving average? (I use a band of 20 DMA as my strategy) a) By identifying support and resistance as shown in the chart: A moving average can also act as support or resistance. In an uptrend, an average may act as a support level, as shown in the chart. This is because the average acts like a floor (support), so the price bounces up off of it. In a downtrend, a moving average may act as resistance; like a ceiling, the price hits the level and then starts to drop again. b) By identifying the trend as shown in the chart: Look at the direction of the moving average to get an idea of which way the price is moving. If it is angled up, the price is moving up, angled down, and the price is moving down, if moving sideways, and the trend is likely in a range. Disclaimer I'm not an expert, i'm still learning. Sharing knowledge will enrich me with more knowledge. This strategy works well for me it may or may not work for you. I tried to explain in a layman's point of view. I reserve the right to be wrong.
NSE:NIFTYEducation
by Chinmayonniftyy
Learning about Exponential Moving AverageEMA full form is *Exponential moving average*. you can google this for detailed explaination and formula. I use 30 week EMA for my stoploss that means, the length chosen is last 30 week on weekly timeframe. if you are using daily timeframe you can use 150 Day EMA (as 5 working days for week * 3o weeks). NOTE- The length choosen is not an fix and not compulsory for use. i use this length from trader whom i follow. Try and backtest different lengths (EX. on weekly-12,30,40 and on daily-21,50,150,200) use which suits your style and pace TO SET EMA ON YOUR CHART- choose Timeframe as W (week) 1. Go to indicator and strategies on top of chart 2. search Exponential moving average select first inbuilt option 3. Set length as 30 click OK. Now you are ready to use.
NSE:NIFTYEducation
by BehindThePrice
5
ADANIPORTS ANALYSIS200 DMA is a great simple strategy which provides good RR trades such as this one. The idea here is simple. Markets tend to be range bound 80% of the time, which is called the contraction phase. The other 20% of the time the market is breaking out, called the expansion phase. To win the game, it is important to understand the probabilities and play the probabilities. For the price to breakout above key resistance levels and breakdown below key support levels, there has to be a catalyst that enables this to happen. The catalyst can be macro-economic news, good/poor earning reports, breakout of war, elections etc. Such news comes about often but is still rather rare. Range bound trades enable a higher probability of success and lower risk as the stop loss that one can place is closer to the price. A breakout trade on the other hand will have a stop loss on the other extreme of the range, increasing the risk significantly. Hammer pattern which has been formed on this chart is a good indication of a a fresh bearish move starting. It shows that the higher prices have been rejected yet again. DM me if you have any questions and LIKE if you found this helpful! :)
NSE:ADANIPORTSEducation
by ArcherDAVIS
Mishra Dhatu Nigam trade opportunity on 30 min chartIf it breaks below 50 EMA on 30 mins chart and sustain then it can go up to approx. 162 with stop loss of 182 and further down to 155 & 145. if it respects the 50 EMA on 30 min chart then it go up to 182 with stop loss of 162 and above 182 it would create new highs. At each support or resistance watch for candle stick patterns like continuation pattern or reversal pattern, and in these case either trail your stop losses or cut your position & book profit.
NSE:MIDHANIEducation
by utkarsh1979
Nice RNAM Chart on weeklyFor learning purpose if you look at the weekly chart - there was consolidation and then it gave breakout on upside. It closed above the 50 EMA from the consolidation range and then rally continued further. It was good opportunity for buy There was rejection from 50 EMA on weekly chart (see very long wick), next or next to next green candle was also good opportunity to buy. You can also go into lower timeframe and look at the buying opportunity little early. Currently also it is in correction phase, so we need to wait for buying opportunity. It may go down further till 286 or may be reversed to upside. Need to wait for the chart patterns to form for buying opportunity.
REducation
by utkarsh1979