Help me understand this chart

veluri1967

Well-Known Member
#2
Hi Can anyone help me to understand the attached intraday chart of Appolotyres. I have marked in white circle. How can we makeout such move of any stock.

http://img259.imageshack.us/img259/5313/appolotyre.png

thanks in advance
Nishant
Hi,

Countertrend moves are sharp and short lived. These are usually meant to shake out weak hands. The tactics used here is creating an illusion of a change of trend in daily chart.

First circle is start of change of trend. Less experienced usually look for confirmation of change of trend. Second circle is what confirms a real change of trend from bearish to bullish.

A big short sell order was positioned at the top of hill which usually placed few points above the high of the day. This order usually a market order which quickly reverses the price when buying power dries up and stop loss orders are taken off. Poeple who were long into the trade were trapped and people who are short are out of trade with Stop Loss hits. People who were long had no way to exit the position except wishing to turn the price up.

To escape such events, you should quickly refer daily charts to know what is actually cooking. The right trade was short sell. The correct place to place a stop loss was at the high of previous day but not today's high. If you cannot bear such wide stop loss, better keep away from such trades.

In short, there are two change of trend signals in the chart.

Its my openion on the chart, you may or may not agree.

Cheers.