Research report on RSI for beginnersLet's break down each point and explain them ::::::::::::::::: Happy learning
**Basic Concepts:**
1. **What is RSI?**
- RSI is like a traffic light for stocks in the Indian market. It tells you if a stock is moving too fast or too slow. If RSI is high, the stock might be overexcited, and if it's low, it might be tired.
2. **Calculation of RSI:**
- RSI is calculated by looking at how much a stock's price went up and how much it went down in the last 14 days. This gives you a number between 0 and 100.
3. **Interpreting RSI:**
- When RSI is above 70 in the Indian market, it's like a stock being at a crowded party – it might be time to leave soon. When RSI is below 30, it's like a stock being alone in a quiet room – it might be time to join the party.
4. **Divergence:**
- If a stock's price is doing one thing, and RSI is doing the opposite, it's like a disagreement. In India, this can signal a possible change in the stock's direction.
5. **Using RSI for Trend Confirmation:**
- RSI can help you confirm if a trend is strong in the Indian market. If RSI is above 70 in a rising market, the trend might continue. If RSI is below 30 in a falling market, the trend might keep going down.
**Intermediate Concepts:**
6. **RSI Period and Sensitivity:**
- You can change the "14-day" period to make RSI more or less sensitive to stock movements in India. Shorter periods are like a faster reaction, and longer periods are like a slower reaction.
7. **Centerline Crossovers:**
- RSI crossing the 50 mark in the Indian market is like a stock changing its mood. Above 50, it's becoming bullish (optimistic); below 50, it's becoming bearish (pessimistic).
8. **Overbought and Oversold Confirmation:**
- Overbought (above 70) in India can be like a stock being too hot to handle. Oversold (below 30) is like a stock being on a big discount. But remember, check other signals too.
**Advanced Concepts:**
9. **Hidden Divergence:**
- Hidden divergence in the Indian market is like spotting a hidden treasure. When a stock's price is doing something special, but RSI disagrees, it can be a hidden signal of a trend change.
10. **RSI and Support/Resistance:**
- RSI levels can act as bouncy floors (support) or glass ceilings (resistance) for stocks in India. If RSI bounces off a level, it can be a good entry or exit point.
11. **Multiple Timeframes:**
- Think of this like looking at a movie frame by frame. Combining RSI analysis on different timeframes in India gives you a full picture of the stock's behavior.
12. **RSI with Other Indicators:**
- RSI is like one player in a cricket team. When you have a whole team of indicators working together in the Indian market, you can make more accurate decisions.
13. **RSI Strategy Development:**
- This is like creating your own recipe for a perfect dish. Traders often create their unique RSI-based strategies in India with specific rules for when to buy and sell.
14. **Risk Management:**
- Just like a goalkeeper in football, you need to protect your goal (money). In India, set limits on how much you're willing to lose (stop-loss) and how much profit you're happy with (take-profit).
15. **Backtesting and Optimization:**
- Backtesting is like practicing before the big game. In India, you can test your RSI strategies on past data and tweak them to find the best ones for the future.
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Relative Strength Index (RSI) Formula:
RSI = 100 -
RSI (Relative Strength Index) is calculated using the following steps:
Calculate Daily Price Changes: Find the price changes (typically closing prices) from one day to the next. If today's closing price is higher than yesterday's, it's considered a "gain," and if it's lower, it's a "loss."
Calculate Average Gain and Average Loss: Calculate the average gain and average loss over a specified period, usually 14 days. The average gain is the sum of gains over the period divided by 14, and the average loss is the sum of losses divided by 14.
Calculate the Relative Strength (RS): Divide the average gain by the average loss to get the relative strength (RS). RS = Average Gain / Average Loss.
Calculate the RSI: Use the RS to calculate the RSI using the formula RSI = 100 - .
Further Explanation:
RSI is used to determine whether a stock or market is overbought (too high) or oversold (too low). Here's a more detailed explanation:
RSI values range from 0 to 100. When RSI is above 70, it's typically considered overbought, suggesting that the stock might be due for a price correction or a pullback in the Indian market.
When RSI is below 30, it's usually considered oversold, indicating that the stock might be undervalued or due for a potential price increase in the Indian market.
Traders often use RSI to identify potential entry and exit points. For example, if RSI crosses above 70, it may be a signal to sell or take profits. Conversely, if RSI crosses below 30, it may be a signal to buy or enter a position.
Hidden divergence occurs when the price of a stock in the Indian market makes a higher high (in an uptrend) or a lower low (in a downtrend), but the RSI fails to do the same. This can be a more subtle sign of a trend reversal.
RSI can be used in conjunction with other technical indicators to enhance trading strategies in the Indian market.
BSE:BANK NSE:BANKNIFTY NSE:ICICIBANK NSE:AXISBANK NSE:SBIN NSE:KOTAKBANK NSE:UNIONBANK NSEIX:NIFTY1!
Moving Averages
Nifty weekly analysis for 30/10/23.Nifty has given a green candle after a fall of more than 3% in the week.
It is given a retracement after the fall and the fall may continue as global sentiment are also showing negativity.
Moving averages are also showing bearishness as nifty has closed below Weekly 20 ema but took support from daily 200 ema. If the daily level is broken, selling may continue.
The market has recover 1% in the last trading session and closed above 19k levels.
In the hourly charts, there was a resistance from 20 ema and entire day it couldn't close above the level.
Support :- 18870, 18720, 18650
Resistance :- 19080, 19250, 19420
The markets are unpredictable, there are chances of showing some retracement continuation and testing 19250 levels or open gap down and giving another selling leg.
Wait for the setup and price levels. Option buyer can take a overnight bearish trade if there is a selling tomorrow.
Bitcoin FOMO levels activity The number of notifications I’ve been receiving is just a small and simple examples to understand the level of sentimental value increased.
In my previous bullish idea on bitcoin, I relied more on Fundamentals of it, which played really well.
On Technical Levels, it has successfully performed mean reversion on 15,60 SMA 100,200.
DOUBLE TOP looks certain if 35k is held rigid.
Otherwise, there’s a chance for pullback till maybe 30k and forward.
Banknifty daily analysis for 27/10/23.Banknifty has been trading below the 200 DMA and for consecutive 3 trading session it has closed in red.
Today, the close is below 550 points after testing low of 42100. The trend in the market is bearish and more selling upto 41500 level can be seen in the coming days.
On the hourly chart, there was a fall in the first half of the session and consoldiated in a parallel channel in the second.
A perfect bearish flag and pole formation is there on 15 minutes chart.
Support :- 42000-40, 41500
Resistance :- 42800, 43000
Market has given a break down and now there are big targets in the market. If the market breaks down the parallel channel there can be another sell off breaching another round number levels of 42000.
Wait for the price action near the levels before entering the market.
Nifty daily analysis for 27/10/23.Nifty has given a nice fall in the first hour of the session and consolidated in 50 points range in the second half.
It has closed around the 200 ema on the daily charts forming another bearish candle of 265 points.
On the hourly chart, the market has after the 10:15 candle it remained in a range and has been trading below the moving averages.
There is a 3.5% fall in just 3 trading session and there are chances of taking a halt as it is trading around the crucial moving average.
Support :- 18850, 18650
Resistance :- 18900, 19000
Wait for the price action near the levels before entering the market.
Banknifty monthly expiry trading levels (26/10/23).Banknifty has given a nice fall of 2% in just 2 trading session and closed below the round fingure of 43k.
Today, it recover for the imbalance in the markets and gave a fall of 200 points in two candle followed by a 300 coming from a single candle that took out the support levels.
On the hourly chart, market has given a good fall and consolidated in the second half which is good for the monthly expiry tomorrow.
Now the market trend for a short term is bearish and sell on rise cycle is in. Option buyers can make positions with a setup confirmation.
Support :- 42600, 42350
Resistance :- 43090, 42380
Banknifty has respected the levels giving the target of 42800 and taking support from the same.
Wait for the price action near the levels before entering the market.
Nifty50 monthly expiry trading levels (26/10/23).Nifty has continued the fall closing 160 points lower and breaking the major support level of 19250.
It has formed another red candle which shows the sellers participation.
On the hourly charts, the market consolidated in the initail hour following a 150 point fall instantly below the support levels.
Now the market trend is good for a bearish traders and option buyer. There are chance of market being in a short term bear trend.
Sell on rise market is there. Option buyers are now going to go green as there will be 50-70 points move in the market for few day.
Support :- 19000, 18880
Resistance :- 19250, 19330
Break down of the major support level gave good movement and almost hit our targets.
Wait for the price action near the levels before entering the market.
Banknifty daily analysis for 25/10/23.Banknifty has given a nice trending move after forming a bearish flag and pole pattern in the market.
It has closed 570 points lower with major fall in a single hour candle of 14:15.
Market continued to hold the previous day low and the support zone around it but in the second half the market started trading below the previous swing low of 43600 finally touch 43k level.
Even the 200 ema couldn't sustain as a support and market has closed below it which adds up to the bearish sentiments.
On the hourly charts, it constantly took resistance from the 20 ema and came for selling.
Support :- 43090, 42800
Resistance :- 43420, 43590
The fall was a nice one and there are chance of market following a trend. The close of the market is outside the ongoing consolidation range.
Sell on rise market has started as it has closed below the swing low. Trade with a strict SL and enter only with a good R:R ratio.
Wait for the price action near the levels before entering the market.
Nifty daily analysis for 25/10/23.Nifty has given a nice fall on the daily charts and took support from the major support range of 19230-250.
There is a nice bearish candle on the daily chart and market is trading below the 20 ema. Chances are of market testing the 200 ema.
On the hourly charts, there was a consolidation in the first half of the market and in the second half the market fell of more than 130 points.
Now there is a bearish trend for a short term. If the market continue to fall and starts trading below the 19200 levels then it will test 19000 and 18850.
Support :- 19230, 19000
Resistance :- 19420, 19500
The market can go trending as it is approaching the monthly expiry.
Wait for the price action near the levels before entering the market.
Finnifty weekly expiry on 23/10/23.Finnifty on the weekly charts has been consolidating in a narrow range, taking support around 19550 levels.
On the weekly chart, market has closed below the 20 ema. It has closed below the closing range of 19800-19830.
There is a nice support around the 19500 level as it has been tested thrice recently. It tried to recover after a gap down opening.
It has formed an inside candle on the daily charts while closing between both the moving averages.
On the hourly charts, it is forming a bullish pattern of higher high higher low. There is a ascending triangle pattern.
Tomorrow is it weekly expiry due to the holiday on tuesday.
Support :- 19540, 19450
Resistance :- 19640, 19700, 19850
Markets are still unable to go trending and there are high chances of market following through the movement as the monthly expiries of other indices are approaching.
Wait for the price action near the levels before entering the market.
Colgate Palmolive Bullish Flag Pattern BreakoutWeekend Pick 1: ColPal
Fundamentals : Strong, Consistent growth on Sales, Profits and EPS. Strong Reserves vs almost debt free. FII holding increased significantly !
Technicals : Bullish Pennant Breakout after good consolidation.
R 1: 2200
R 2: 2300
R 3: 2400++
SL : 1950
Nifty weekly analysis for 23/10/23Nifty has been taking support around the round figure number of 19500 and has formed a kind of tweezer top on the weekly charts.
The market has been volatile and still confused in deciding the trend.
It has closed below the 20 ema on the daily charts. There is an inside candle or a halt candle after a gap down opening.
Market has been consolidating in a range from 21 september and the month of october has entered the last week of the month.
High chance of a break out or break down are there. It can give nice targets with a small Stop loss in a trade.
On the hourly chart, there is a bearish moving averages cross over and it remained in the first hour candle after a gap down opening.
Still the markets are hitting the stop losses and are not profitable for an intraday option buyers.
Sideway cycle of the market will be changed once it starts trading outside the major levels of 19500 to 19850. Once this range is cleared on the either side there will be a trending market.
On the smaller time frame, market hasn't moved much while taking resistnace from the 20 ema and closed below both the moving averages (15 minute chart).
Support :- 19480-500, 19350
Resistance :- 19580, 19680
Market has been consolidating after a gap up or gap down opening and there will be a movement once it opens flat.
Wait for the price action near the levels before entering the market.
My analysis on Dr Reddys chart ?From 20 trading sessions the price has been trading in a range of two important Fibonacci levels. Also the short-term and long-term ema's bands are flattened in the same range. So, currently there is no trend. For an uptrend the price has to breakout the level of 5700 and for a downtrend the price has to breakdown the level of 5400. For another confirmation of a trend after breakout or breakdown we have to check for the crossover of ema bands.
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Disclaimer: This is my pre market analysis and my trading journal. Not a suggestion to buy or sell. This material is for education purposes only.
Thanks
S. Simranjit Singh Virdi
Nifty Technical Analysis - Using Algos to benefit from fall In a falling market, an investor is benefitted the most by averaging at lower prices. However, emotions can ruin the decision making and the investor can end up losing the opportunity.
The algo which i have written (link shared below) works best in a falling market as every candle it checks if the low is below previous low and then buys. So the average buying price keeps going lower and accumulation happens slowly and steadily.
OVer the long term, the benefit of low cost can never be over emphasised.