Teach A Man To Fish And.........

tanewbie · #81 5th April 2006, 10:04 PM

Positive Divergence of Price wrt MACD

A positive divergence occurs when MACD begins to advance and the security is still in a downtrend and makes a lower reaction low. MACD can either form as a series of higher lows or a second low that is higher than the previous low. Positive divergences are probably the least common of the three signals, but are usually the most reliable and lead to the biggest moves.

see attached charts of arvind mills in weekly and daily mode.

Terahertz · #82 6th April 2006, 01:43 PM

Hello Mr. Saint,
i have been following this thread since the beginning and as a beginner i have a learnt a lot.
but i have difficulties in recognizing the trend. some charts are so messy i cannot get any clear pattern. For eg. plz have a look at the chart of Bank of India which is attached. ( i got it from fi-advisor.com)
In the chart the stock makes higher lows which might be an uptrend but again it makes lower highs which can be a downtrend. What kind of trend is this? i think as long as it will not break the support its in an uptrend. Am i correct? Anyway is it advisable for an investor to enter that stock which is forming lower and lower highs.

Next query is on Andhra Bank. Plz see the chart (collected from icharts.in) .
It was in a downtrend since late july and recently there is a small rally but it did not still cross the downtrendline no. 1 ( the one in red which is drawn from the high of july to the high of January), but if we consider another downtrendline no. 2( the one in black from the high of Jan to the high of late Feb) then there is a breakout above the downtrendline. Now which trendline should an investor consider. Or should the investor take into consideration another trendline (in red) which is below trendline no. 2 considering the fact that 'more the points which connect a trendline the more stronger the trendline' as u said in a previous post.

plz help me Mr. Saint.

Saint · #83 7th April 2006, 07:24 PM

Quote:

Hello Mr. Saint,
i have been following this thread since the beginning and as a beginner i have a learnt a lot.
but i have difficulties in recognizing the trend. some charts are so messy i cannot get any clear pattern. For eg. plz have a look at the chart of Bank of India which is attached. ( i got it from fi-advisor.com)
In the chart the stock makes higher lows which might be an uptrend but again it makes lower highs which can be a downtrend. What kind of trend is this? i think as long as it will not break the support its in an uptrend. Am i correct? Anyway is it advisable for an investor to enter that stock which is forming lower and lower highs.

Next query is on Andhra Bank. Plz see the chart (collected from icharts.in) .
It was in a downtrend since late july and recently there is a small rally but it did not still cross the downtrendline no. 1 ( the one in red which is drawn from the high of july to the high of January), but if we consider another downtrendline no. 2( the one in black from the high of Jan to the high of late Feb) then there is a breakout above the downtrendline. Now which trendline should an investor consider. Or should the investor take into consideration another trendline (in red) which is below trendline no. 2 considering the fact that 'more the points which connect a trendline the more stronger the trendline' as u said in a previous post.

plz help me Mr. Saint.

Hi TeraHertz,

Let's drop the Mr,just Saint would do.

As for BANK OF INDIA,you are right.There really is no clearly discernable trend on the daily charts.In sideways trend.For a clearer perspective,open up your weekly charts of BOI.We are still in an uptrend,still higher pivot highs and lows.The week ending Feb 10th,we got a pivot low there at 118.So far that is our previous pivot low.That would be where our stop would be if you are in this trade.(Always,give it some room,so the stop is at 118-1=117).A break of 117,and this uptrend is in question.So long as this area holds,BOI is still in an uptrend.Now,as for new entries into BOI is another matter.Watch for a pullback or more sideways pattern to enter.Look out for that trendline.If that trendline holds,good area to buy.Cracking that trebdline to the down,and again,this uptrend on the weekly charts is in question.

Saint

Saint · #84 7th April 2006, 07:57 PM

Quote:

Originally Posted by Terahertz

Hello Mr. Saint,
i have been following this thread since the beginning and as a beginner i have a learnt a lot.

Next query is on Andhra Bank. Plz see the chart (collected from icharts.in) .
It was in a downtrend since late july and recently there is a small rally but it did not still cross the downtrendline no. 1 ( the one in red which is drawn from the high of july to the high of January), but if we consider another downtrendline no. 2( the one in black from the high of Jan to the high of late Feb) then there is a breakout above the downtrendline. Now which trendline should an investor consider. Or should the investor take into consideration another trendline (in red) which is below trendline no. 2 considering the fact that 'more the points which connect a trendline the more stronger the trendline' as u said in a previous post.

plz help me Mr. Saint.

Being an investor,you are looking at medium to long time frame.For a clearer perspective,always look at your weekly charts.We have lower pivot highs and lows ,basically still a downtrend on the weekly.Trendline 1 as drawn by yourself is more or less correct.Not Trendline 2............the more points,meaning the more pivot highs that it connects in a downtrendline the stronger that trendline becomes.Trendline 2 is connecting all the highs,not the pivot highs,so inaccurate from a daily/weekly chart perspective.But for an intraday to few days perspective,not wrong.That trendline can be traded......a break above that trendline is a buy.But that doesn't mean we are in an uptrend.Just good for 1-2 days sniper attack on the intradays.

We basically need a breakout over 106 to say that we are headed back into an uptrend.For now,it's downtrend on the daily/weekly And Bank.

Great going,my friend.A questioning mind is a mind that is learning.Feel free to ask your doubts.Shall answer to the best of my capacity.

Saint

Terahertz · #85 7th April 2006, 08:52 PM

Quote:

Let's drop the Mr,just Saint would do.

Quote:

Great going,my friend.A questioning mind is a mind that is learning.Feel free to ask your doubts.Shall answer to the best of my capacity

Thank u saint, thank u very much. feels really great with such encouraging words.

Anyway, in the case of Andhra Bank, u said it should cross 106, how could u calculate that figure? is it a figure which the trendline meets when extended towards the price axis. i thought it should break atleast 110 which is the previous pivot high. please correct me if i am wrong.

Saint · #86 7th April 2006, 08:59 PM

Quote:

Originally Posted by Terahertz

Thank u saint, thank u very much. feels really great with such encouraging words.

Anyway, in the case of Andhra Bank, u said it should cross 106, how could u calculate that figure? is it a figure which the trendline meets when extended towards the price axis. i thought it should break atleast 110 which is the previous pivot high. please correct me if i am wrong.

Yep, basically whenever that trendline breaks to the Up.If we are going to remain in this downtrend for more time,then that figure will keep coming downwards.

106 is the break over the trendline which gives us an indication that things are moving to the up.Yes,right you are,the previous pivot high is 110 and over that is confirmation that we are in an uptrend.

All the best!
Saint

Terahertz · #87 7th April 2006, 09:08 PM

yes, got it!! That means, if it goes above 106 then the uptrend is in question and ,it will be in our watchlist and we wait for it to cross 110 , which is when we will be sure of the uptrend and we are in trade.
thnx

Saint · #88 7th April 2006, 09:14 PM

Quote:

Originally Posted by Terahertz

yes, got it!! That means, if it goes above 106 then the uptrend is in question and ,it will be in our watchlist and we wait for it to cross 110 , which is when we will be sure of the uptrend and we are in trade.
thnx

Yep,you got it......but just a correction of language so that we are both on the same page.

A break above 106 and we have a possible uptrend,the previous downtrend is in question.A break over 110 is confirmation.

Great going!

Saint

Saint · #89 7th April 2006, 09:31 PM

For those not getting a picure of what this whole pivot thing is all about,just check out this post by Karthik regarding pivots.

http://www.traderji.com/16832-post1.html

Diagram self explanatory.

Saint

Terahertz · #90 8th April 2006, 12:52 AM

yes, i got it
thanx anyway saint