Chart patterns

[vishalalluri]

You did not get my question.

Fox ex: See the below chart:

My question are points 3 and 4 in coherence with the line created by points 1 and 2?

the trend line is drawn joing 1 and 2 its an uptrend

this is how we try understaning the major supports given in the markets rally
the 3 and 4 tested the up trend line projected from 1 and 2 and the line projected from 1&2 did act as a support .@3,4

2 days back 4920 was tested and we had a bounce and again yesterday

we have primary and secondary trend lines

trend lines are always straight cos when we try joining newer highs or lows they become the secondary trend linesmy piece of thought again

 

[vishalalluri]

1) That is what I am asking. Why do we see higher lows and lower highs?
5) So is there any professional interest during the consolidation period or it just the retail traders who keep trading among themselves?

1)the fight of the bulls and bears the bulls try to pull the prices up then the bears start acting saying enough is the word but as the trend has been up previously the bulls have th stronger hold they dont allow the bears to pull price lower .resulting in higher lows

in an uptrend as the index keeps moving the price action of the scrip shows buying interest .the bulls have a stronger side to pull the prices higher from the bears

bunny thanks now i am trying to get it now u r an eye opener u made me think for some time

i think its cos of the buying interest which is generated among the bulls bottom line

5) FII or professional interest reduces during the consolidation period ,low volumes, range bound , fii's are not looking in for small profits

they scalp at all dips during the pattern then enjoy thier profits AFTER THE BREAKOUT

in this time being retail/small investors are the ones who actually trade with small profits


PHEW : AGAIN MY PIECE OF THOUGHT

 

[bunny]

Thanks for for views.

 

[prasadam]

hello Bunny & Vishal,

nice discussions.
look at it this way.
we try to exit just before the known resistance / previous high and enter before known support / previous higher low.

depending on the perception of market participants price forms various patterns like

higher high & higher low, higher high & previous low, current top and lower low etc.,

which looks like triangles, wedges, channels etc.,

my two cents.

 

[vishalalluri]

Hi Vishal,
[*]Why are converging patterns more common than broadening patterns?
[*]Theoretically, which is a more potent pattern? ascending/descending triangles or symmetrical triangles?

Thank you,
-Bunny.

prasad whats ur answer to these 2 questions please share

please sen me more good books pdf if u have any im obssessed wth chart patterns he he

 

[vishalalluri]

hi prasad

can a bull flag be present in a secondary trend line as drawn by me for alok
ind
http://www.traderji.com/technical-analysis/33774-chart-patterns-7.html#post370944

 

[vishalalluri]

hi friend s

here i come again

i hope my posts are bringging in some interest in newbies

i want views on the charts of reiagroltd

looks like head and shoulders pattern :rofl:

 

[prasadam]

hi vishal.

go through the link.

http://stockcharts.com/school/doku...._analysis:chart_patterns:flag_pennant_continu

hi prasad

can a bull flag be present in a secondary trend line as drawn by me for alok
ind
http://www.traderji.com/technical-analysis/33774-chart-patterns-7.html#post370944

 

[AW10]

Ah, one more question:
Why is the trend line straight? Why are they not curved, as in why do they follow a liner equation and not a parabolic/hyperbolic one?

IMO, cause they are trend LINE not trend "Curve". Line is always straight, needs minimum 2 points to draw it and so on.. whatever we learned in schools.

I think, the simplicity of drawing TL, and concept of TREND = continuation of Higher high, Higher Low sequence, make them useful tool.

It is false impression that 1 close below a TL means the trend has changed. Market is not that easy to interpret.. and as you know that SM can easily keep price above/below the TL cause they have also read all the stuff about trendline trading and they know how dumb money use TL.

For me, for any price level, just a break is not sufficient. Price needs to comeback to that level and retest it.. and get rejected there. Thats what is the confirmation from price action. Unfortunately, not many TA books talk about retest.

Exception is, when price goes significantly away from the price level, that it has no chance of coming back near that price level in shorter TF.

Hope this helps.
Happy Trading

 

[AW10]

helloo al

can a ascending traingle formation be followed directly by a descending traingle formation if yes then what should be the volumes has been eating my head
seniors kinldy help in clearing this doubt of mine:sos:

i am posting the chart please letme know if this could be possible

Vishal, all patterns fail. And we shd keep this in mind while trading patterns.
If you dig more into this topic, then u can find out the success rate of various pattern. As far as I remember, I haven't seen any pattern giving more
then 60% of success rate.

So, Ascending tringle also fails. When trading any breakout, we got to monitor the action after the breakout. (I have written about this on my NR7 thread cause that is also breakout trading).
For success of a breakout, we want to see big bar formation, pickup in volume, retracement at lower volume but after retracement, the price and volume shd pickup, no returning or staying below breakout level, etc.

Presence of more such factors increases our confidence in breakout and at the sametime, absence of them, is giving us warning.
As a pattern trader, we ignore such weakness and get biased in our view.

In my experience - CHART WILL TELL YOU WHAT YOU WANT TO LISTEN. Cause as human being, we are tuned to listening selectively and ignoring lot of crap stuff around us.
And as we know more about TA, more reasons will we find to support our views. Only appraoch that has helped me overcome this bias is to have my simple rules to give me binary answer (or answer with least subjectivity) based on facts at that moment.

Hope this helps.
Happy Trading