Financial Daily from THE HINDU group of publications
Sunday, Apr 30, 2006
Financial Daily from THE HINDU group of publications Sunday, Apr 30, 2006 |
|
|
|
|
|
|
|
Investment World
-
Technical Analysis Markets - Stock Markets
In reply to the question on MRPL, you had mentioned last week that the stock in a "non-trending" phase. What does this phrase mean? Please also clarify how to identify the price band within which stocks can be said to be in a non-trending phase? Also, you have used the phrase "weekly close" in one of the replies to a query. Please elaborate on this as well. Bhagirath A stock would be in a trending phase if it registers a series of higher highs and higher lows in an uptrend or vice- versa during a downtrend. If it fails to move in this fashion, we can describe the price to be in a non-trending mode. During the non-trending mode, the price remains confined to a narrow trading range. There is no hard and fast rule to identify or define the width of this trading range. It would vary across stocks, depending upon the price range in which it has been traded in the recent past. Another key aspect is that a stock could be in a non-trending mode in the daily charts and in a trending mode in the weekly charts. There is no inconsistency in this arrangement. The key is to identify stocks that are in a trending mode in the higher time frame and in a non-trending trending mode in the time frame that you are trading. For example, if you trade using the daily price charts, identify a stock that is in a non-trending mode in the daily charts. This stock should however be in a trending mode in the weekly charts, which is the next higher time frame in relation to what you trade. By keeping a tab on the price action in the daily charts, you can take position as and when the price breaks out of the trading range. When the breakout happens, the stock would invariably get into a trending mode in the same direction as the trend in the higher time frame. Most explosive moves are preceded by such consolidation of price action in a tight trading range. Coming to the next question of yours, the phrase "weekly close" refers to the closing price recorded on the last trading day of the week. Kindly let me have your view on Ind-Swift Labs bought at Rs 153 and India Glycols at Rs 202. Vikas Verma
Ind-Swift Labs (Rs 121): There are no signs of the completion of the downtrend that the stock has been confined to over the past several months. There is, however, only a marginal downside risk from the prevailing levels as the stock appears to be at the end of the downtrend. The stock is likely to commence a major upward move on the completion of the downtrend. A weekly close past Rs 140 would indicate that the downtrend is complete. Remain invested with a stop-loss at Rs 96. Avoid fresh exposures. India Glycols (Rs 180): A close below the support zone at Rs 150-155 would have bearish implications. On the other hand, a close above Rs 195 would imply that the next segment of the uptrend is underway. Hold with a stop- loss at Rs 149. Fresh exposures may be deferred.
More Stories on : Technical Analysis | Stock Markets
Article E-Mail :: Comment :: Syndication :: Printer Friendly Page
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2006, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|