pivot points

I'm a new member of this forum and I would like to thank all the members who earlier answered my query regarding TA books.. As always I have another question regarding intermediate support or resistance levels.

I have been watching the weekly charts of some of the stocks..
and certain parameters tend to devlop for which I wud like all the senior member to guide me.

1. when the weekly bar makes higher high n higher low as well as higher close than the previous one.

2.When the weekly bar makes higher high , lower low but higher close than the previous week.

3. when the bar makes lower high, lower low n higher closing.. than the previous week

4. When the bar makes lower high, lower low n lower closing than the previous week.

5. when the bar makes lower high , higher low n higher closing than the previous week..

I wud like to know wht kinda ramifications all these permutation n combinations can have making buying n selling decisions

and whether more importance shall b given to only to closing price or taking the whole price situation(O,H,C,L) in account.

I would like the member to help me out in this regard ..


Regards.

Sanefellow_213

Hi Sanefellow_213:

I would take a stab at answering your query if you can describe to me the opening, high, low and closing levels of the previous bar along with the opening of the current bar (was the open higher or lower compared to the previous bar etc.)

Regards

Nautilus

supposedly for VSNL
weekly data. 28.10.05 was
0-320, H-328, L-270, C-273

and its weekly data as on 3.11.02 was

0-274, H-307, L-274, C-301

now wht inferences can b drawn frm this..

Regards,

Sanefellow_213

Hi Sanefellow_213:

Since I do not know this stock and do not follow it nor trade it and not knowing as to whether it is in an up-trend or a down trend - this is how I would interprete it based on the information you have provided:

1) Week ending 28/10/05 the market opened higher at the begining of the week and attempted to make a "significant new high" and then lost its upside momentum as the buying power started to decline and the sellers came in and started selling the market and continued selling till the end of the week - as the price closed near the lows - trading a range of 58 Rs for the entire week.

2) For the week ending 3/11/05 the opening and the low made at the begining of the week was held and the market attempted a small rally and closed near the high - but the market price action shows that some sort of price equilibrium has been established as the market has traded in a very narrow range (33Rs) during the entire week and the price range for the whole week was contained within the price range of the previous week - this type of price bar is called an "inside and narrow" bar.

This "inside&narrow" bar although small has a lot of significance and can lead to several interesting trade possibilities depending on whether the share is in an up-trend or a down trend.

If this share was in an up trend this is what I would do: I would now watch the new week with interest and see how the market behaves. I would buy this share if any one of the following conditions are filled:

a) If the share opens above the high of the previous week (307)
b) If the share opens above the low of the previous bar and then trades higher than the high of the previous bar (307)
c) If the share gaps above (307)

In all three cases I would want to go long at a price of Rs 310

In all three cases my sell stop-loss would be fixed at Rs 271.

If the share was in a down trend I would again watch the new week with interest and see how the market behaves. I would sell this share if any one of the following conditions are filled:

a) If the share opens below the low of the previous week (274)
b) If the share opens below the high of the previous week and then trades below the low of the previous week (274)
c) If the share gaps below (274)

In all three cases I would want to go short at a price of Rs 271

In all three cases my buy stop-loss would be fixed at Rs 310.

There are a couple of anti-trend scenarios which will indicate that the market may be getting ready for a corrective phase - which I have not discussed here.

Hope this helps.

Regards
Nautilus

thnx Nautilus bhai. for your guidance

I'm sure this will indeed. b a big help in understanding future stock trends.

Regards.


Sanefellow_213

Good explanation, Nautilus. I suppose this explanation should be the same for other timeframes to beginning with 60min for other types of trading?Thanks