Teach A Man To Fish And.........

[Saint]

hey saint,
Sorry for posting a question so many days after u posted this..... Had no other choice coz i joined tradeji a week back and noticed this amazing thread only today.
Now onto my doubt..ehh question! In the above graph for cisco shouldnt the support be at 16.93 and not the 17.68 like u have shown there.Or is it 16.93 for the wave which started a lil before nov and extended till dec..??

Hi Trader,

Both levels of support.........that chart was posted to indicate that an area of resistance,once broken to the up,later became an area of support.If the correction from the up broke through the 17.68 area,yes the next support would have been that 16.93 levels.

Every present support is a potential future resistance and vice versa......that was the only indication of that aforementioned chart.

All the best!
Happy Trading!
Saint

 

[Saint]

Hi Saint:
I am a beginner to trading. I would like to thank you for the efforts you put in explaining the technical jargon with real life examples.

Great work;
Shanky

Thanx Shanky and Gujjuri for your kind words.....

All the best!
Saint

 

[Trader123]

Hi Trader,

Both levels of support.........that chart was posted to indicate that an area of resistance,once broken to the up,later became an area of support.If the correction from the up broke through the 17.68 area,yes the next support would have been that 16.93 levels.

Every present support is a potential future resistance and vice versa......that was the only indication of that aforementioned chart.

All the best!
Happy Trading!
Saint

Thanks saint..! Hmmm now the graph mentioned looks entirely diffrent aftr u explained..Geeez i feel stupid now..!! Was i always loking at graphs the wrong..way..hmm!! Whew..

 

[Saint]

Okay,now that we have gone through trendlines,etc,and I do hope that those interested went through the education on Chart Patterns at Stockcharts.com.

As said before we are in this business to make profits.We are not in this business to become "experts" so that we can stop trading and start some newsletter service,etc.We learn this so that it can help us trade the markets.........we learn so that we can pull profits out of the markets whatever the market is doing.

So,therefore,let us go straight to trading these patterns,with the assumption that those interested have gone through the theory at stockcharts.com or whichever TA book that you have.

TRADING THE RISING WEDGE:

The RISING WEDGE is a reversal pattern,as always the word "usually" comes into play.

Nice one that took place in ARVIND MILLS......see the chart below.Self explanatory.We got higher pivot lows as ARV MILLS made new highs through 2003 and 2004.But newer highs in November 2004 and later was accompanied by lower volumes.This rising wedge took nearly a year in the making......The week ending Oct 14th ,and we got our breakdown bar(indicated in the chart with a red arrow).

Look to short below the breakdown bar with your stops at where the green arrow is placed.Once it cracks,keep moving the stop down to the previous pivot high,so on so forth.

http://www.stockcharts.com/education/ChartAnalysis/risingWedge.html
Happy Trading!
Saint

 

[Trader123]

All the best!
Saint

wow...!! Must say u r awesome..!! have a question though.. lets say we are in a trade at Rs.500.. the stock rallies and then reaches 550.All this while creating higher tops higher lows.On the daily chart however we see that there is a small black candle..lets say this is because it closed at 550 yesterday and today has closed at 540.What do we do now..?Weekly charts our pivot is at 500 and the stop is obviously at lower levels .. how do we confirm or in other words verify that this is not the start of a downtrend.
I am sorry to bother u with this question.. please take your time in answering this question i am in no hurry.I know i have time specially with markets having found a liking towards the south..!!hope i sound funny..hehe

 

[rahulg77]

On the daily chart however we see that there is a small black candle..lets say this is because it closed at 550 yesterday and today has closed at 540.

Hi sorry to answer this as u had posted it to Saint. First of all black candle is not formed cause the day close is below the previous day close. A black candle forms if the close is below todays open itself.

What do we do now..?Weekly charts our pivot is at 500 and the stop is obviously at lower levels .. how do we confirm or in other words verify that this is not the start of a downtrend.
I am sorry to bother u with this question.. please take your time in answering this question i am in no hurry.I know i have time specially with markets having found a liking towards the south..!!hope i sound funny..hehe

Now booking profit is up to u. If u are a trend follower you would book part profits when trend line is violated. then u would exit the rest when the previous pivot low is also taken as that would mean uptrend is in question. Remember trend is valid till the proof of evidence proves otherwise(as Martin pring says)

your stop loss should not be below as once the price moves so much above you should have had trailing stop losses. and in any case if it was below then also if u are a trend follower you should exit by now.

Now candlestick would be a different understanding. it depends where the small black candle has formed. Has it formed within the body of the previous white candle. Above it. Below it. If it has formed within the body then it could be a Harami pattern. above would be a evening star. all these need confirmation the next day.

Also, a confirmation just shows that current trend has ended. It does not tell us if it will reverse, it could move sideways. It might be a small correction a large one. Magnitude cannot be judged. Hence, candlesticks are more beneficial if used with other indicators. A confirmation with trend line being violated, or any other indicator turning negative is more useful. Though u can use it individually too but a confirmation is a must.

Hope this answer your query. Saint please add whatever I have missed out on.


Rgds

Rahul

 

[gobatman2001]

Dear Saint,

Wow! What an eye opener this thread has been for me. Kudos & Hats off to you!

Thanks from the bottom of my heart for helping us newbies!

Cheers, Thanks & God bless,

 

[Trader123]

Thanks a lot rahul..! Yup .. had that candlestick all wrong didnt i ..! Thanks a lot..gng through stockcharts.. is a lot of help..!! Need to tighten on a lot of things before the markets turn..!
Happy trading !

 

[Anupama Singh]

Hello Saint!

At what stage in a intermediate downtrend do we say that we are in a bear market?How do we make out the difference between a major trend move and an intermediate trend move?

Please take your time in answering,maybe over the weekend.

Thanks!
Regards!
Anu

 

[rahulg77]

Thanks a lot rahul..! Yup .. had that candlestick all wrong didnt i ..! Thanks a lot..gng through stockcharts.. is a lot of help..!! Need to tighten on a lot of things before the markets turn..!
Happy trading !

Not a problem trader123,

We all are learning here. Its A great place to be. If u want to learn more about candlesticks, there is a book by steve nison japaneese candlestick charting technique. Its a great book and very easy to understand. best of luck.

Rahul