Experiments in Technical Analysis

[AJAY]

Hi friends,

Basically RSI is of no use in Trending Markets. This fact is known to every one here. So, why look into these indicators- counting the close line where a pivot has not yet been formed. We may also think that if RSI reaches the previous level, where the nifty should be and that can be atleast counted as our next target.

I am not denying anything which has been discussed here. Definitely not capable of hitting the ELEPHANTS here .

I am trying to give one more view what we can make out of chart reading. If I am not in right direction, excuse me.

Thanks

AJAYKUMAR

 

[karthikmarar]

Dear Ajay

Thanks for bringing this up. I wish to discuss further on one point raised by youcounting the close line where a pivot has not yet been formed . Like you Many may have had doubts on this.

Conventional or Traditional definition says that when higher high or lower lows in the price is not matched by the higher highs or lower lows in the Indicator we have a divergence.

Personally I go a step further and consider price movements up or down not matched by momentum itself as divergence. If you look at Nifty in the last three weeks, it has been inching its way up and at the same time the momentum indicators ROC,Trix ,RSI etc have been inching down. For me this is divergence between price and momentum. Of course the time period is also important when we consider this. I feel three weeks are adequate to consider the divergence credible. Of course these kinds of divergences do not produce big reversals but are good warning signals for the weakening Trends.

And we all know that Divergences are not decision-making events. They are nothing but warning signals. I call them the first warning sirens, thanks to my experience during the recent gulf war. When the first warning siren is heard just grab your gas mask, be ready. It is just a warning. No need to act till the second one (which says the danger is near, how near we really dont know. Actually one has to really act when one hears the blast. Fortunately I never heard one ).

Maybe my thinking is a little out of the box. I do like to go beyond the traditional ideas. Also we see variation in the way we look at these indicators. For example Wilder never talked about RSI as a overbought/oversold Indicators and it is very commonly used as one.

Infact Guruji, you had also fuelled my tendency to think out of the box. Remember the RSI of the displaced Ema etc.

Also would like to mention that I personally use RSI only for the divergence and nothing else.

Warm regards

Karthik

 

[AJAY]

Hi Karthik,

The narrow range of price move what you are talking about can also be indicative for another impending surge in prices. This can be understood only by observing the intraday charts. The most important thing here to consider is why the narrow range is happening and where it is happening. How much probability was there for the markets to fall from these levels and why the markets didn't crack day before and yesterday. No doubt markets reached a very good point where from the reaction can be expected. But the markets touched the levels day before itself and reacted properly to it during intraday itself. And even yesterday the markets sustained the liquidation- ofcourse didn't shoot that much, though the potentiality to support the shoot out was very much present in the orders in the markets yesterday. Sometimes this scenario happens even before the rally also. This is the game of the big fish. They give failure break outs and get traders out of their way to have a smooth drive.

As you said it may be the first warning as it is all theory of probability. But I request you veterans to give the picture of the other side of the coin also. What will happen if the markets will start shooting from these levels? We , the learner community here, - which is very large indeed-will go confused .

Anyhow thanks for your inputs. And sorry for taking another step against the elephants.

AJAYKUMAR

 

[rahulg77]

Hi Karthik,

The most important thing here to consider is why the narrow range is happening and where it is happening. How much probability was there for the markets to fall from these levels and why the markets didn't crack day before and yesterday. No doubt markets reached a very good point where from the reaction can be expected. But the markets touched the levels day before itself and reacted properly to it during intraday itself. And even yesterday the markets sustained the liquidation- ofcourse didn't shoot that much, though the potentiality to support the shoot out was very much present in the orders in the markets yesterday. Sometimes this scenario happens even before the rally also. This is the game of the big fish. They give failure break outs and get traders out of their way to have a smooth drive.AJAYKUMAR

Hi Ajay,

I would be grateful if you could explain your theory in more detail. Numbers if possible would be highly appreciated. I am interested in understanding your view point to.

Rgds

Rahul

 

[casoni]

Dear All , To Identify The Trend ,i Think Cci Is Also A Good Indicaotr ,this Indicators Shows Script\mkt Is ,trending Or Flat. Kindly Check It Your Self I Am Attaching Chart + Alf......... Senior Members Please Throw Your Valuable Comments \light On This Indicator ...thanks

 

[saji oommen]

Hello,

This seems similar to woodies pivot.

Saji

 

[shamim]

Hi Casoni,
You are absolutely right. There is nothing like CCI with histogram to show you the way. You can use CCI all by itself without any other indicator. The chart that you posted says it all. One could have gone long very early on at the first ZLR and would still be in the trade.

I hope that you would provide some more education to us novices on this wonderful indicator.
Thanks again,
Shamim

 

[jaykiru]

Hi Casoni,
Thanks for this beautyful indicator
Karthik sir I post Nifty fucture Hourly chart for your suggecation
Give some focus of this Wolfe Wave pattern.(..@ Seniors). See Daily chart upper side nifty
Veg resistance 3580..
Thanks in Advance
Jay

 

[karthikmarar]

Hi Jay

Excellant. It is almost a classical wolfewave. A bearish one too. Normaly the point 5 lies on the same line 1-3. But it is known to over shoot. So if this materializes then we will see levels below 3400..... let us wait and see..

regards

Karthik

 

[jaykiru]

One More Chart. Nifty Daily with Elliott Wave. Comeants..@Seniors

Jay