UPTREND, DOWNTREND, and CHNAGE OF TREND.

I have been Learning Stock market from past 2 years. Finally the only I could grasp are these three. Trend Up, Trend Down, and Change Of Trend.

When the up trend or down trend is fairly started it is very very easy to say it that trend is up or down. Problems comes when trend changes or consolidation phase comes.. .. but becomes easy if give our time to analyze and observe different phases of trends..

The only book I liked on stock market is Reminiscences of stock operators. it has discussed the bull and bear market. identifying and trading them. co relating sectors and groups. Many things. I was very impressed with this book. But the problem was where to start. The only key was to observe and experience, the way the Jesse livermore started. I decided that I will observe the chart , movement, rallies, corrections, and all those written in the book. I was interested in the 2008 crash.I pulled out the 2008 chart and started reading I could clearly see that 2008 crash gave few warning first and also many stocks had already topped out 2007 itself which was the signal that bull market coming to an end. As written in the book that stock market give loud warning before end its trend. it does not happen overnight.

I will be posting chart about trend and change of trends here with my views. anyone can participate here. but this thread is strictly about trends and change of trends. no indicator or oscillator here. don't want to clutter and complicate the beautiful things.

What is require:

1. An experience with market atleast for 1 year
2. bit of candle stick knowledge
3. An access to candle stick chart.


Trends....process for up and down trend is same..
1.change of trend
2.rallies than correction , rallies and correct ...happens few time..specially at start of trend.
3.formation of base. usually after start of trend ..the base formation comes..which again a good opportunity to participate in trend
4.few patterns that repeats... I will discuss what i hav observed on this.

Dlf trend in the making?



Here Is the of chart which I will be tracking. It was in the downtrend from many months. I feel the up is starting in this..Lets see how does it goes.

Sign Of Trend Change...
Look At LOW1 it new low for DLF.
DLF tried to make again new low (LOW2). Thought it broke LOW1 but could go down anymore....Instead it went to break previous peak (HIGH1).
This is the sign of change of trend.

Now after this rally we expect a correction which happens in up trend.I have marked it as correction in the chart.
Now I am looking to break one more high which would confirm its uptrend.
Will upload chart whet it happens. If it does not crosses high then it might go into base formation like consolidation which would go for months.

Here is 1 Hr chart for Dlf.

I also share your view of trend change in DLF. Some of the additional points that I see on the chart are
1) at low 1, volume was high i.e. buyers appeared on chart who were absorbing the selling
2) low 2 was as expected, it broke the low1 and must have trapped lot of technical analysts who give call like "go short below the low1". Volume did pickup here showing me that buyers are back in action.
3) Low1/2 are around 200, which is approx 50% of high of 400. 50%is typically good psychological level to look for support (key gann number).
4) Next, it broke the down trendline and made higher swign High.
5) Current Retracement have stoped above Trendline and made new Higher low. This swinglow is at the level of swing high after low2. i.e this is the first sign where resistance has turned into support.

Hence, it is tick marking almost all of my points of trend reversal. I will certainly go long on it between 250 to 230 with stop below 230. First target is 300 (which is also resistance level as well as 50% of fall from 400 to 200). The trade is showing decent Reward Risk of 2.5+.

As a warning sign, it is showing the trend reversal when Nifty is still in downtrend from the highs of Nov-10, Jan-11. We are nearing bearish to sideway period of market (may to sept). If market goes down, than reality is not a sector which will get the money. Rather money will flow into fmcg and pharma.

Happy Trading

Sometimes, i feel trend is over rated. Basic premise of an up trend is higher high higher low on price. As a trader, my main concern is primarily my trade location, how wide my stop loss is. By the time a trend matures and reverses, a pure trend follower will have to wait till a particular level is broken before he acknowledges a trend reversal. he then has to wait for a decent retracement before he decides to board the bus. This process ensures a poor trade location and a wide stop loss.

As an investor, my main objective is to get good value for my money. Poor entry does not justify that objective.

Momentum and volume are my closer friend than trend. Momentum cannot be seen on price chat... One needs some momentum indicator / volume analyser for that. using indicators is not everyone's cup of tea, so most settle for buy high with the hope of selling higher...

@AW10...as always wonderful post ...explained dead right...the first two points you have mention were in my mind but missed it while writing..

@Linkon...Trend fun to trade when you trade it from starting....trading from middle requires courage with strict plan..and trading at top is fatal..
I think if we closely monitor rallies and correction we wont miss a bus and that too without wide stops..but lets see if I am able to do it..time will tell

I also want to put one thing with my little knowledge that instead of playing Uptrend downtrend one should try to play Retracement o r in simple word I believe money is always made in 60% at middle of down or up trend But no TA FA in it just guessing

Please add P&F chart reading to assess the breakouts

Everything can be interpreted from price chart by its behavior..by its action..
I am trying to do this...but there are time comes when I am confused I cannot interpret...for that I need more practice. This was the purpose for this thread.
To analyze in multiple time frame and its behavior. Kinda like Jesse livermore...but he used tapes in his times..but method was same...

Linkon7, I disagree with you here that price chart can't tell u momentum.
Lets go back to basic (from physics days )
So, when I look at price bar, that are wide range --> it tells me direction.
When there are small shadow on either side i.e. bars like 90-10 open close, that tells me velocity. So what else do I need to tell me momentum.
If I want to take "look back" period into consideration to confirm, then zoom out to weekly, bi weekly bar and see what bar is telling me.

In DFL chart, 2 weekly bars after low 2 are showing solid momentum. Than there is hammer on last week (another sign of bullish force).

Hence in my view, momentum can be read thru price bars.
Now coming to entry, at break of High 2, certainly it is late. But we have enough signs of trend change and why should someone wait for another confirmation of break of high 2 and enter with high risk. Infact, smart entry would have been when price touched the 225 level (previous swing high) and that acted as support. Break of high 2 is nice zone for aggressive scale-in or better wait for price to come back to high 2 after breakout and than decide of scale-in as conservative add.

That is how I would look at it.
Happy Trading

Correction : a trained eye can notice change in momentum in price chart. Untrained eyes like myself needs indicators with arrows pointing to the upside to tell me where to buy....

I am downloading the eod data of stocks just to see how u used the zoom in to weekly bar as confirmation... feel i stumbled upon a lesson to be learnt here.... :clapping: