Traderji and Seniors pls guide-colgate

rahulg77 · #1 5th April 2006, 04:43 PM

Dear Traderji and Senior members,

I have a query. I am invested in Colgate. According to me MACD is in divergence with the trend. Trend is moving up and MACD is moving down. The 9 day crossover is above the MACD-what i understand by that is a sell signal. Now its just touching it again. Even if we draw a trend line on RSI it shows a down trend. RSI is moving down. But the stock is moving up. Am i reading the indicators wrong. Please advice me regarding the same.

Regards

Rahul

srisara · #2 5th April 2006, 05:31 PM

Rahul,

This stock is an a major uptrend.
looking at the weekly charts, the MACD is rising decently along with the Price and also the 26 EMA is also trending up, although the gap between the EMA and the Price has increased considerably.

You can still trade this stock on the LONG side, BUT No New Long Positions. For those who wish to enter Long, can enter it on a Pullback (check charts before you enter).

You can expect a consolidation period before its moves up again.

coming to Daily Charts, eventhough the MACD is steadily coming down, it still decent in a sense the MACD Histogram hasnt done negative.

There could still be some steam left and MACD and again turn up in a very short term.

Aslo, its quite natural for some stocks RSI to remain above 70.

You havent mentioned your Entry Price, So cant quite give you exits. But, If you are a late entrant hold with a tight Stop Loss.

If you are a very long term trader and was a early entrant into this, wait for weekly EMA to turn flat or bottom to liquidate..

Hope this helps you.........
Regards
Satya

Traderji · #3 5th April 2006, 06:25 PM

Good analysis Satya, way to go!

srisara · #4 6th April 2006, 12:07 AM

Traderji,

the credit goes to Traderji and the Traderji forum for imparting so much education to all of us..

Satya

rahulg77 · #5 6th April 2006, 12:11 AM

Quote:

Originally Posted by srisara

Rahul,

This stock is an a major uptrend.
looking at the weekly charts, the MACD is rising decently along with the Price and also the 26 EMA is also trending up, although the gap between the EMA and the Price has increased considerably.

You can still trade this stock on the LONG side, BUT No New Long Positions. For those who wish to enter Long, can enter it on a Pullback (check charts before you enter).

You can expect a consolidation period before its moves up again.

coming to Daily Charts, eventhough the MACD is steadily coming down, it still decent in a sense the MACD Histogram hasnt done negative.

There could still be some steam left and MACD and again turn up in a very short term.

Aslo, its quite natural for some stocks RSI to remain above 70.

You havent mentioned your Entry Price, So cant quite give you exits. But, If you are a late entrant hold with a tight Stop Loss.

If you are a very long term trader and was a early entrant into this, wait for weekly EMA to turn flat or bottom to liquidate..

Hope this helps you.........
Regards
Satya

thank u Satya. i thought if MACD is moving down and price chart up it shows divergence and that bulls r losing steam.

also we can draw trend lines on RSI so i saw RSI in down trend. therefore i assumed price to correct. Can we drw trend on Rsi or just see its level pls explain usage of rsi and macd if i m wrong.
rgds
Rahul

srisara · #6 6th April 2006, 01:07 AM

Rahul,

with the knowledge is acquired as now, i will try to clear ur doubts as much as i can.

1. MACD isnt moving down in the chart, the divergence happens only when there is a drastic downward turn of MACD, like going from up to down. Still the MACD is in positive territory.
If you notice, in Colgate for most of the times MACD is in +ive territory.

2.Relative Strength Index (RSI) is basically and oscillator and fluctuates between say 80-20 levels (need not be always). so, wheever RSI goes above 70 or nearing 80 indicates overbought and below 40 or 30 oversold.
its gives the strength of the current trend and can be used to either enter long or short positions.

3. Till now didnot heard about drawing Trend Lines to RSI. But, as i know, generally we draw trend lines to the stock price.

coming to exaplainig the importance of MACD and RSI and their usages, it will take long time to write them. you can visit www.investopedia.com to get a good insight of them.

Satya

Saint · #7 6th April 2006, 01:24 AM

Great stuff,Satya.........and keep em coming!!

Saint

rajesh.sadhanala · #8 6th April 2006, 09:39 AM

Quote:

Originally Posted by srisara

Rahul,

with the knowledge is acquired as now, i will try to clear ur doubts as much as i can.

1. MACD isnt moving down in the chart, the divergence happens only when there is a drastic downward turn of MACD, like going from up to down. Still the MACD is in positive territory.
If you notice, in Colgate for most of the times MACD is in +ive territory.

2.Relative Strength Index (RSI) is basically and oscillator and fluctuates between say 80-20 levels (need not be always). so, wheever RSI goes above 70 or nearing 80 indicates overbought and below 40 or 30 oversold.
its gives the strength of the current trend and can be used to either enter long or short positions.

3. Till now didnot heard about drawing Trend Lines to RSI. But, as i know, generally we draw trend lines to the stock price.

coming to exaplainig the importance of MACD and RSI and their usages, it will take long time to write them. you can visit www.investopedia.com to get a good insight of them.

Satya

Hi Satya,

Great Stuff. Nice explanation. Seems u have put lot of effort in working all these things.

Raj

karthikmarar · #9 6th April 2006, 03:59 PM

Great Analysis, Satya. Hope to see more of it.

regards

karthik

rahulg77 · #10 6th April 2006, 05:53 PM

thank you Satya....it sure did clear up a lot of things for me.

Rgds
Rahul

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