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 day has similar table to decide Daily/ Weekly/ Monthly Trading Strategy. The Support / Resistance levels are different in stocks 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 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 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 its 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 has gap between High & Low of last 3 periods in comparison to close is too high. Traders must see support/ resistance and other tools before entering any trade on the basis of this.
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 :
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):
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:
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.