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In the following
paragraphs we shall explain you as how to read the figures to
arrive at any Trading/ Investment Strategies.
First of all, be clear that we believe in Charts and figures
than long stories with tens of ‘ifs’ and ‘buts’. With little
knowledge of Technical Analysis one can see the Basic Trend,
Patterns, Support/ Resistance Levels, Breakouts, Gaps,
Overbought/ Oversold Zones, Short/Long Term Moving averages
crossovers and much more. Just a glance at any chart can give
you hint of possible market action in near to long term.
1. Support/ Resistance Levels (Daily/
Weekly/ Monthly Trading Strategy)
As the name suggests, there are many traders who trade only on
support & Resistance levels. The table contains following
details i.e. Name of Scrip/ Last Close/ 5-Period Low/ Support 2/
Support 1/ Trend Level/ Resistance 1/ Resistance 2/ 5-Period
High.
In Conjunction with other indicators & tools, this table can
used for:
1. Fresh Longs or Shorts on Trend Change Levels.
2. Booking Part/ Full Profit in Long/ Short Positions
3. For Quick gains of 1 to 5 Rupees on breaking of previous High
or Low
Every Newsletter (i.e. Daily/ Weekly and Monthly) has similar
table to decide Daily/ Weekly/ Monthly Trading Strategy. The
Support / Resistance levels are different in every table based
on the Open / High/ Low / Closing of price in Daily/ Weekly/
Monthly Charts.
The table is in order of Bullish to Bearish on the basis of last
closing Price vis a vis Trend Level. If the Scrip price is
trading Higher than Trend Level, it is a positive sign for bulls
and vice a versa. Traders can hunt for the scrips, which are on
verge of crossovers to bullish to bearish or otherwise. Above
Trend Level, scrip is likely to face resistance at ‘Res-1’ then
‘Res-2’. High of last 5-Periods also acts as resistance. Traders
can make entry for few Quick Bucks if scrip breaks 5-Period high
to make a new High. Same rule shall apply on Downside below
Trend Level.
2. Overbought/ Oversold Scrips in
(5-ROC/ 12-ROC/ 9-RSI/ 14-RSI/ William%14R)
Similar to Support/ Resistance Table, this can also be used by
Daily/ Weekly and Monthly Traders and Investors to decide their
strategy. The figures 5/ 12/ 9/ 14/ 14, are the Period of Charts
like in Hourly Charts it is 5-Hour ROC/ 12-Hour ROC/ 9-Hour RSI/
14-Hours RSI etc. In Table of Daily/ Weekly/ Monthly, this
Period will change to Days/ Week & Months respectively.
In Conjunction with other indicators & tools, this table can
used for:
a. Profit Booking (in Full or Part)
b. Fresh Entry in full or part
c. Extending Trailing Stop Loss
d. Sign of Caution in Long or Short Positions
The table contains 8-10 most Highly Overbought/ Oversold scrips
in each category. Suppose a Scrip is overbought in more than 2
tables, it warrants caution in Long Positions though any scrip
can continue to remain in Overbought Zones for many periods but
part profit booking is always advisable. Similarly Highly
Oversold scrips in more than 2 tables suggest that trend is
likely to change from bearish to bullish. If other indicators
support, gradual buying can be started but with Stop Loss.
3. Bar Reversal (Up/Down), Candlestick
Engulfing Patterns (Bullish / Bearish), Doji Pattern, Volatile
a. Bar Reversal (Up/ Down) : It is a very good indicator for Day
& Swing Trading particularly after significant rise or fall over
number of periods. Bar Reversal in Weekly/ Monthly Charts are
very useful as ‘Advance Indicators’ to catch a short term moves
on either side. For Example in case of Upward Weekly
Bar-Reversal, Investor can buy gradually on declines or Panic
selling for an impending short term up move. Same equation
applies in case of Downward Bar reversal. Weekly/ Monthly Bar
Reversals after a reasonably long Bull/ Bear phase indicate
Trend Reversal if supported by other indicators. (IMP: This
indicator should be used in conjunction with other indicators
with use of Stop Loss mechanism)
b. Japanese Candlestick Engulfing Bullish/ Bearish Pattern: It
is a Japanese Candlestick Reversal which is refined and more
powerful form of Bar Reversal. When a ‘White’ candle engulfs a
preceding ‘Black Candle’ it is called Bullish Engulfing and when
a long Black Candle engulfs preceding ‘White’ candle it is
termed as Bearish Engulfing pattern. It can be used for Quick
Trading if a stock is moving up/down for many periods and other
indicators like Overbought/ Oversold Zones are in favour of
decline/ recovery. Weekly/ Monthly Engulfing Patterns after a
reasonably long Bull/ Bear phase indicate Trend Reversal if
supported by other indicators
c. Doji Star (Japanese Candlestick Pattern): It is again a
Japanese Candlestick Pattern in which Stock Price closes near
it’s opening level after a reasonable High/ Low. A Doji Pattern
gaps above or below a While or Black Candlestick . It is a
Reversal signal, confirmation of which comes during next Trading
Day. ‘Smart Traders can keep a watch on such stocks and trade
Long/ Short on confirmation with the help of other indicators
like Overbought/ Oversold, market sentiments etc.
d. Volatile Stocks: As commonly known volatile stocks provide
better opportunity for Day and Swing Trading. This column gives
list of stock in which gap between High & Low of last 3 periods
in comparison to close is too high. This is just for guidance
purpose. Traders must see support/ resistance and other tools
before entering any trade on the basis of this table.
4. Gaps (Upward/ Downward > 0.50%):
Gaps are spaces left on the Bar Chart where no trading has taken
place. An Upward Gap is formed when the Lowest price of the day
is higher than the highest of the previous day.
A Downward gap is formed when the Highest Price of the day is
lower than the lowest price of the previous day. There are 3
type of Gaps i.e. Breakout Gap (When price moves out of any
important Pattern), Continuation Gap and Exhaustion Gap
(indicating termination of a upward or downward move). We have
given a filter of 0.5% of stock price to avoid any whipsaw
movements.
5. Bullish & Bearish Stocks (For
Intra-Day):
Based on Technical Analysis of Extreme Short Term Charts i.e. 5
Min/ 30 Min & 60 Min, we short list a few stocks which are on
verge of Bullish/ Bearish breakouts, at Crucial Support
/Resistance or in highly Overbought/Oversold zones or stocks
which have broken any chart pattern The Stocks can be put under
'Watch List' during Market hours for possible move on either
side for Quick Profits by Day traders.
6. What the Charts Foretell Now : (In
Detailed Newsletter, Part - B, Only)
Based on Technical Analysis of Extreme Short Term/ Medium Term
Charts i.e. 60 Min/ Daily & Weekly, in short we give our views
about certain Stocks (15 to 25). Targets of such observations
are generally achieved in next few days until and unless stated
otherwise.
7. Bulls & Bears (Technical Charts):
(In Detailed Newsletter, Part - B, Only)
One Charts can say much more than words. We give minmum 2 Charts
on week days and 4 charts in weekly Newsletters, about select
stocks with important chart patterns with other indicators like
Volume, RSI, ROC, Momentum, MACD, OBV, Moving Averages etc, with
tentative targets for Short or Medium or Long Term. Very Useful
for those having little knowledge about Technical Analysis or
for experts who need confirmation of their opinion.
8. General Buy/ Sell Recommendations:
(In Detailed Newsletter, Part - B, Only)
Based on Daily/ Weekly Charts, we prepare a list of
Bullish and Bearish stocks with their tentative targets for
Extreme Short Term, Short Term or Medium Term. Investors and
Traders can create their positions or Book profit gradually for
the recommended time frame. For Example, If any stock is giving
bullish indications for medium term, investors can gradually
pick up this stock on every decline with major support as Stop
Loss Level. Similarly, if any stock is giving bearish
indications for extreme Short Term, one can book part profit on
every rise and wait for the decline to re-enter the stock.
9. If I were a Trader (Similar to Rs10
Lac Portfolio): (In Detailed Newsletter, Part - B, Only)
This is just a Model Portfolio for the guidance of investors who
do not want to put their efforts or time to decide their Short
Term Portfolio, we suggest the stocks under 'If I were a
Trader'. It is not necessary to follow this Model Portfolio.
Investors/ Traders can use their own research and arrive at
trading decisions by taking help of our Newsletters.
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Importance
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Futures &
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When to Trade
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How
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