Useful Tools

amitt29 · #1 30th June 2006, 12:41 PM

Hello Guys,
I am a very young trader having started only a year ago.But in this course of time have learnt a lot of useful things on market.I use TA to trade.I do so mainly on Options.Equity is not my cup of tea.But i base my system on Cash data.
Okay I will share with u a few things that i learnt.One thing at a time.
Moving Average
I see a lot of ppl using Moving Average,especially the new ones.Its a lagging indicator meaning it follows the trend.I see ppl using 25 day,50 day and 200 day etc.Traditional TA proposes this.
What I propose that if possible use Fibonacci series as ur periods ie 3,5,8,13,21,34,55,89,144,233 etc.Use of EMA will be encouraged as well as WMA as these are more relevant.
A recent example is the stabilizing of Nifty at 2634 region.(Making a low of 2595).Now 377 day EMA was sitting bang at 2634.I ve seen it work better.Ofcourse its a confirmatory tool for me.Has worked well for me right from the slides.
Now it was very heart breaking for me to see the closing of Nifty Fifty,because I regarded Amitji as a Dronacharya for me because even though i had not met him,i had learnt a lot from his postings.It was the first thing for me to do inspite of it being posted near about market opening time.
I hope that Amitji wud reconsider his decision in due course of time.

A word of caution,I see a double top being formed on the nifty,i dont know what its implication wud be.Perhaps somebody wud post.
Regards
Amit

aca_trader · #2 30th June 2006, 12:57 PM

Quote:

Originally Posted by amitt29

A word of caution,I see a double top being formed on the nifty,i dont know what its implication wud be.Perhaps somebody wud post.
Regards
Amit

Amit,
Can you please attach a chart where we can see the Double Top Formation?

Best Regards,
--Ashish

amitt29 · #3 30th June 2006, 01:15 PM

Hi Ashishji,
Here is the chart.Of course u will see some discrepancy beacuse I use the neely method of plttin price but nevertheless real high shud be in range of 3124.I will wait for ur comments.
Regards.
Amit

Agilent · #4 30th June 2006, 01:28 PM

Quote:

Originally Posted by amitt29

Hello Guys,

A word of caution,I see a double top being formed on the nifty,i dont know what its implication wud be.Perhaps somebody wud post.
Regards
Amit

Oops sorry .. have to see yr chart again

Agilent · #5 30th June 2006, 01:39 PM

Yes now ..
My suggestion is to look for a double top in a chart of a shorter duration ... say 6 months ... and preferably see an OHLC chart

If u can't easily retrieve, I will do so ... let me know

Now if u still think its a double top in formation, one has to analyse

Will revert

AGILENT

Agilent · #6 30th June 2006, 01:47 PM

Here u are :

http://in.finance.*****.com/q/bc?s=%...off&z=l&q=b&c=

Does it make it better ? WIll also have to look up theory behind double tops before passing judgment ( I mean , whether such patterns apply to reversals from 'Secondary' rallies ... like the one we are witnessing since mid June ... I had imagined they will belong more appropriately to reversals of 'Primary' trends )

Will have to study more in detail

AGILENT

aca_trader · #7 30th June 2006, 01:57 PM

Quote:

Originally Posted by amitt29

Hi Ashishji,
Here is the chart.Of course u will see some discrepancy beacuse I use the neely method of plttin price but nevertheless real high shud be in range of 3124.I will wait for ur comments.
Regards.
Amit

Magee says that Double Tops are not as common as Traders do believe. As per Magee, few requirements of a double top are that they take usually one to one & half months to form, the valley from the top should be around 20% of the top values and the volume pattern should show high activity on the first top, diminishing activity during the reaction and again high volume (but lower than that during the 1st top formation) during the second top formation.

As the time period of the suggested pattern is quite small and volume data is not shown on the chart, I would hesitate to call it a double top for other factors are also not matching. However, we rarely see bookish chart patterns in real life and hence if the prices come down from the top level shown by you and cross the valley formed decisively, I would like to go short with SL at the top level.

BTW, perhaps the Double Top formation,if there was any, would be negated today if the prices stay at the level they are.

Best Regards,
--Ashish

P.S.: Please, no Ji. Assi to avi vadde chhotte ain.

aca_trader · #8 30th June 2006, 02:03 PM

Quote:

Originally Posted by Agilent

( I mean , whether such patterns apply to reversals from 'Secondary' rallies ... like the one we are witnessing since mid June ... I had imagined they will belong more appropriately to reversals of 'Primary' trends )

AGILENT

While the theory says only what you have writen over here, in my opinion, paterns could be applied in the secondary rallies also however, adjustment with periodicity of charts would be called far and also the rewards would be on the lower side. Afterall, anything can reverse only to the extent it has advanced.

Regards,
--Ashish

amitt29 · #9 30th June 2006, 02:19 PM

I think it maybe so that todays intraday high maybe 3124-3128 and the upside to watch from here wud be 3198.Where a profit taking may set in.
Also note in hindsight how the action is being repeated as was the case in the beginning of last months contract.Will have to give it more thought over the weekend.
Perhaps this will make it more clear.(i am attaching the OHLC chart).the purple line is the plot method of Glenn Neely.
Now i will share 1 more thing.
Please note the breach of trend channel(by the OHLC) on lower side,implies oversold conditions.Vice versa on upper channel.It has given me
Regards
Amit

karthikmarar · #10 30th June 2006, 02:28 PM

I agree with agilent . Double tops normally appear on primary trends and not in intermediate rallys. . Double top are normally top reversal patterns appearing after the market has been trending up for a longer period about six months.

Also please remember only 30% of the double tops really work as reversal patterns. The rest fail. Also Double Tops have to be confirmed by decisively breaking of the neckline. Otherwise they hold no significance as an reversal pattern.

Karthik

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