My charts (and yours too........)
- Thread starter babukraman
- Start date
- Tags inv hns sffp wipro
Hi Babu & RnE,
I am following your posts from quite some time & honestly appreciate yours understanding of the chart. Novice in trading .. so whenever I observe your charts I can easily visualize the patterns though many a thing dont understand at all..e.g EW. But when I try to analyze myself not able to recognise pattern. Would appreciate if you people can provide some helping hand in analysing & recognizing the patterns with your experience then it would of great help.
Regards
Rajesh
I am following your posts from quite some time & honestly appreciate yours understanding of the chart. Novice in trading .. so whenever I observe your charts I can easily visualize the patterns though many a thing dont understand at all..e.g EW. But when I try to analyze myself not able to recognise pattern. Would appreciate if you people can provide some helping hand in analysing & recognizing the patterns with your experience then it would of great help.
Regards
Rajesh
Is a trend line valid, once it is breached?
Babu Kothandaraman
2010-12-02
One must have a dynamic view as far as Technical Analysis is concerned. How this dynamism plays an important role is explained below.
Once a trend line is breached, there are three possibilities.
1. A reversal or
2. A side ways movement or
3. The continuation of the same trend but to a much shallower degree than the previously steeper one.
Case Study of Bank Nifty on Daily chart
Period: Jan ’08 to Apr ’09 down trend period
Chart legends:
Line 1B: The very obvious down trend line of that decline.
Line 1A: Drawn connecting the points 1 and 2 (Lower High of May ’08).
Line XY: it isn’t a trend line but a Support during Oct & Nov ’08 and Jan & Mar ’09.
Let’s consider the down trend line 1A (hmm.. sounds like a bus route, here in Chennai). It had consistently been Resistance level at points marked 2, 3 and 4. After the point 4 Resistance, there was a break out in Aug ’08. Let’s pause here for a while. Since, there was a break out, did it stop us from extending that line? Not at all! As an analyst, we would always extend these trend lines to see whether there would be any retest to happen in future; if so, will these extensions provide the required Support (in this case) or Resistance (in case of an uptrend line break down). Here, there was a retest at point 5 which held well as a Support. Again, this extension of the down trend line held up as Support levels at points 6 and 7.
One may question about the validity of this Support level when the price went down through this line twice, between the point 6 and 7. I’ve drawn the Support line XY at lows of those pull backs which later had provided Support on two other occasions. Please be reminded that the line XY is not a trend line but a Support level formed when price went down through our main trend line 1A. The reversal occurred from the point 7 and to dwelve upon it would be a deviation from our point of discussion now.
The down trend line 1A was breached in Aug ’08; the trend still continued but on a slightly shallower angle; and the price happened to take the Support of this breached down trend line before reversing at point 7 for good.
Conclusion:
The trend lines must dynamically be extended, even if breached, to get a clear picture of the price actions.
Babu Kothandaraman
2010-12-02
One must have a dynamic view as far as Technical Analysis is concerned. How this dynamism plays an important role is explained below.
Once a trend line is breached, there are three possibilities.
1. A reversal or
2. A side ways movement or
3. The continuation of the same trend but to a much shallower degree than the previously steeper one.
Case Study of Bank Nifty on Daily chart
Period: Jan ’08 to Apr ’09 down trend period
Chart legends:
Line 1B: The very obvious down trend line of that decline.
Line 1A: Drawn connecting the points 1 and 2 (Lower High of May ’08).
Line XY: it isn’t a trend line but a Support during Oct & Nov ’08 and Jan & Mar ’09.
Let’s consider the down trend line 1A (hmm.. sounds like a bus route, here in Chennai). It had consistently been Resistance level at points marked 2, 3 and 4. After the point 4 Resistance, there was a break out in Aug ’08. Let’s pause here for a while. Since, there was a break out, did it stop us from extending that line? Not at all! As an analyst, we would always extend these trend lines to see whether there would be any retest to happen in future; if so, will these extensions provide the required Support (in this case) or Resistance (in case of an uptrend line break down). Here, there was a retest at point 5 which held well as a Support. Again, this extension of the down trend line held up as Support levels at points 6 and 7.
One may question about the validity of this Support level when the price went down through this line twice, between the point 6 and 7. I’ve drawn the Support line XY at lows of those pull backs which later had provided Support on two other occasions. Please be reminded that the line XY is not a trend line but a Support level formed when price went down through our main trend line 1A. The reversal occurred from the point 7 and to dwelve upon it would be a deviation from our point of discussion now.
The down trend line 1A was breached in Aug ’08; the trend still continued but on a slightly shallower angle; and the price happened to take the Support of this breached down trend line before reversing at point 7 for good.
Conclusion:
The trend lines must dynamically be extended, even if breached, to get a clear picture of the price actions.
Last edited:
if u have datadownloader of volumedigger.com of joy then u can dnload spot niftydata. other wise dnload the application from www.volumedigger.com.
follow the help file how to customise it to dnload data.
chartnexus also have spot nifty chart.
follow the help file how to customise it to dnload data.
chartnexus also have spot nifty chart.
What usually I have noticed in case of trendlines is that in EOD it could be breached but till close below that trendline don't make it really a pattern failure. Many a times I have seen like stock use to cross trendline with making some low below that line and then jumps to give expected result. May be u can this as bear trap, so usually I prefer to keep closing SL of picks on the basis of trendline as closing basis but its really fearful to work this way as stock can go anywhere on downside. So yet not able to completely rely on this technique.
Now take H&S as example trendline joining neck line is also an trendline which is actually a support earlier now after cross has became resistance and retest it and goes back down. So we can simply place it as support/resistance and after breach works vice - versa.
Now take H&S as example trendline joining neck line is also an trendline which is actually a support earlier now after cross has became resistance and retest it and goes back down. So we can simply place it as support/resistance and after breach works vice - versa.
Dear Raunak ji,
It's very nice of you to pass on such compliments. Even though, the initiative is from my side, there are others who've joined the band wagon and making this thread a better one. I thank, again, all those who are contributing here, at this time! This thread is the result of their own initiative as well. :thumb:
That's the beauty of the sharing, isn't it, Raunak ji?
It's very nice of you to pass on such compliments. Even though, the initiative is from my side, there are others who've joined the band wagon and making this thread a better one. I thank, again, all those who are contributing here, at this time! This thread is the result of their own initiative as well. :thumb:
That's the beauty of the sharing, isn't it, Raunak ji?
Hi Rajesh!
Thanks for your feedback and compliments.
I can understand your frustration while trying to analyse the complex EW stuff. To learn, please dedicate a portion of your time to read some TA books, one at a time. If you keep on reading and at the same time checking out charts posted here or on the Elliott Wave thread, I'm sure that you will become an expert.
Let me give you this link which RnE has posted some time back. This is for EW study materials collections which he has used. Hope this helps you!
Happy reading!
http://www.traderji.com/technical-analysis/45193-my-charts-yours-too-26.html#post481232
Cheers!
Babu Kothandaraman
Thanks for your feedback and compliments.
I can understand your frustration while trying to analyse the complex EW stuff. To learn, please dedicate a portion of your time to read some TA books, one at a time. If you keep on reading and at the same time checking out charts posted here or on the Elliott Wave thread, I'm sure that you will become an expert.
Let me give you this link which RnE has posted some time back. This is for EW study materials collections which he has used. Hope this helps you!
Happy reading!
http://www.traderji.com/technical-analysis/45193-my-charts-yours-too-26.html#post481232
Cheers!
Babu Kothandaraman
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