Trading-by-technical-levels

[manoharpillai]

Long pending trading range finally got broken on the down side... Now we have to see
5620/5640 Res. protected for this down move head to its expected targets 5540/5520 levels. Weekly & Daily charts TL supports are around 5530
RSI 14 on daily chart is at 38..As mentioned earlier it can touch 30.
Will be interesting to see nifty makes reversal around support levels of 5540 and 5520.
Weekly Chart

 

[manoharpillai]

Nifty closed at 5620.. descending Flag formation in Daily chart.
Res. at 5670 and Sup. at 5520. I expect nifty to test lower targets on time
consuming manner.

 

[timepass]

Nifty closed at 5620.. descending Flag formation in Daily chart.
Res. at 5670 and Sup. at 5520. I expect nifty to test lower targets on time
consuming manner.

Yeah, time consuming, premium eating manner for sure. There is a double bottom around 5585 level, so maybe it will spend some time doing simply rangebound timepass for another 2-3 weeks

 

[manoharpillai]

TP Bhai.
when ever price breaks from a range on either side it generally tests the next swing level.. if you ask me where should be the SL for shorts as in this case Firts TL Res. 5670 and then 5698 where it reversed in last 4 days as per the price Res. and that is the final SL for any shorts.
The targets on the down side i look at 5520 and this as a major support for this up move.
earlier retracments did made approximate 50% expecting the same now..
Why i said time consuming before the event of any break out on the up said price always makes the trader guessing ..
have no doubt will celebrate Diwali on a very happy note.

 

[dashr]

I sometimes use RSI(22) to see overbought or oversold levels. RSI is considered overbought when above 70 and oversold when below 30. I have attached a weekly chart of Nifty for the last two years. Never before has it been so much overbought as it is now.

Manoharji good to see your posts again. I really enjoy your technical analysis and can relate to it well.

 

[timepass]

I sometimes use RSI(22) to see overbought or oversold levels. RSI is considered overbought when above 70 and oversold when below 30. I have attached a weekly chart of Nifty for the last two years. Never before has it been so much overbought as it is now.

Why RSI(22) ?? Usually the value 14 is used for RSI. Of course, 22 could be a monthly cycle.

 

[gunsho]

I sometimes use RSI(22) to see overbought or oversold levels. RSI is considered overbought when above 70 and oversold when below 30. I have attached a weekly chart of Nifty for the last two years. Never before has it been so much overbought as it is now.

Manoharji good to see your posts again. I really enjoy your technical analysis and can relate to it well.

Staying in overbought for a while could also be a indication of strong bull run right?

 

[manoharpillai]

RSI 14 is universal setting, nothing wrong changing it but have to back test it that is time consuming need to study on a longer period of time.
Posting 5 year weekly chart with RSI 14 just check price re-action at levels highlighted.

Tomorrow 5670 and 5695 are two levels for Res. and trend reversal watch these levels sup. comes at 5620 and 5580

 

[dashr]

Why RSI(22) ?? Usually the value 14 is used for RSI. Of course, 22 could be a monthly cycle.

That's a very good question. 14 periods is default value and there is nothing wrong in using it. With setting as 22 the no. of overbought/oversold signals reduce substantially and you get very few signals. Thus, any signal you get is a strong one.

In the present case, this is the first time in the last two years, NIFTY has been overbought for this long. If there is anything called smart money on earth, then this is the best time to book profits. Best time for someone who feels he is stuck in the stock market to come out.

 

[manoharpillai]

To simplify the calculation explanation, RSI has been broken down into its basic components: RS, Average Gain and Average Loss. This RSI calculation is based on 14 periods, which is the default suggested by Wilder in his book. Losses are expressed as positive values, not negative values.
The default look-back period for RSI is 14, but this can be lowered to increase sensitivity or raised to decrease sensitivity. 10-day RSI is more likely to reach overbought or oversold levels than 20-day RSI. The look-back parameters also depend on a security's volatility.

RSI is considered overbought when above 70 and oversold when below 30. These traditional levels can also be adjusted to better fit the security or analytical requirements. Raising overbought to 80 or lowering oversold to 20 will reduce the number of overbought/oversold readings. Short-term traders sometimes use 2-period RSI to look for overbought readings above 80 and oversold readings below 20.

According to Wilder, divergences signal a potential reversal point because directional momentum does not confirm price. A bullish divergence occurs when the underlying security makes a lower low and RSI forms a higher low. RSI does not confirm the lower low and this shows strengthening momentum. A bearish divergence forms when the security records a higher high and RSI forms a lower high. RSI does not confirm the new high and this shows weakening momentum.