Trade, Live and Thrive

Sunday, April 22, 2012

CNX Nifty 50 - Triple Screen 'Technical Analysis' - Week: 16 April to 20 April, 2012 - Bulls bounce off the Wall..

Recap:

We went into last week with a Bearish Overhang (click), Bulls had their back against the wall...

Bulls bounced off the Wall (click) and then despite Global Bear pressures (click) ended the week neutral.

One prospect for the coming week, was discussed and studied (click).

Lets analyze the Index with our three screens, to learn what lies ahead...

Nifty 50: Long Term View (or) Month Chart, each candle is 1 month's price action (or) EOM Chart:

CNX Nifty 50 - End of Month (EOM) Chart - 20 April, 2012.

The RBG channel on the screen above, covers price action spanning 3 plus years.

The 34 EMA has been good support for the Monthly candles recently.

The 5 EMA's Bullish cross to above the 13 SMA is a given next month, if the Index stays above 5220.

Bulls continue to be in charge of this long term screen.

Nifty 50: Medium Term View (or) Week Chart, each candle is 1 week's price action (or) EOW Chart:

CNX Nifty 50 - End of Week (EOW) Chart - 20 April, 2012.

We zoom into the Price action with the above screen and analyze the last 15 odd months.

We studied the Bullish Engulfing (last two candles), and the hope for a Three Outside Up (click) on Friday last.

We notice that the 5 EMA has bearishly crossed below the 13 SMA, and the price faces resistance at 13SMA.

Support at the 34 EMA, has been consistent.

Neither Bulls nor Bears, can claim supremacy on this screen.

Nifty 50: Short Term View (or) Day Chart with closing prices in a line graph (or) EOD Chart:

CNX Nifty 50 - End of Day (EOD) Chart - 20 April, 2012.

The screen above has an RBG channel with 4 odd months data. We look to pinpoint the immediate action points here.

MACD remains sub zero even as the Histogram has started ticking in the plus.

Index seems to have made another Lower High, one has to see if the previous Higher Low will sustain.

After the Bullish crossovers and channel breaks (click) we have a 'Throwback' to Channel top (look through the free reference links below for more on this).

Throwbacks and Pullbacks:

http://piphut.com/2010/05/pullbacks-and-throwbacks/

http://www.activetradermag.com/index.php/c/Trading_Strategies/d/Throwbacks_and_pullbacks

Looking Forward:

Staying above the 34 EMA(EOD) is critical for Bulls.

The candle patterns on Nifty and Sensex (studied below) on EOW give the Bulls hope.

Bears have used global cues to beat back the Bulls recently - one needs to watch that.

Settlement week again and the sentiment seems to be changing towards the Bulls albeit mildly.

The BSE 30 - Ichimoku Study - Week: 16 April to 20 April 2012 - Bulls Pierce thro'

......Regulars can skip below and go straight to the chart......

Introduction:

We do an weekly Ichimoku study, to complement our 'Triple Screen Technical Analysis', of the markets we study.

When taking the 'weekly' time frame, to use the Ichimoku Cloud, we need to consider...

The standard settings for an Ichimoku Kinko Hyo chart are 9, 26, 52 and are used on EOD charts.

When Ichimoku was created back in the 1930s, a trading week was 6 days long. So we have one and a half week(9), one month(26) and two months(52).

Now that the trading week is 5 days, we should actually use 7, 22 and 44 instead.

However, the majority of systems, worldwide, still use the old settings 9, 26, 52.

We need to study markets, on a weekly basis on this Blog.

How do we fit 52, 26 and 9 into that need? With one candle being one week?

There are 52 weeks in a year, 26 weeks form two quarters (or a half year) and 9 weeks equal about 2 months. Fits the old logic - albeit differently.

Presto, we have a longer term view with the same settings!

So, if you like to move off the beaten track, for a change...read on...

Quick Reference :

Chikou Span - purple line,

Kijun Sen - blue line,

Senkou Span A - black line,

Senkou Span B - grey line,

Kumo - grey shaded area,

Tenkan Sen - red line.

Useful resources (free) from the Web:

http://www.freestockcharts.com/

http://www.kumotrader.com/ichimoku_wiki/index.php?title=Main_Page

BSE 30: Medium Term View (or) Week Chart (or) EOW with the Ichimoku Cloud:

The BSE Sensex 30 - End of Week Chart - 20 April 2012

Last 6 Signals seen on BSE 30 - Week Chart (EOW) marked on chart above:

1. Senkou Span Cross: Strong Bearish Signal (S)
2. Chikou Span Cross: Weak Bullish Signal (C)
3. The Kijun sen cross: Weak Bullish Signal (K)
4. The Flat Kumo: Bullish Signal (Ko)

5. The Tenkan Sen/Kijun Sen Cross: Weak Bullish Signal (T)
6. The Kumo Breakout: Bearish Signal (B)

Also marked with the blue arrows see...

2: The Chikou Span (purple line) has deflected off the price line, instead of crossing bearishly below it .. This is Bullish.

3: The last candle has moved back into the Kumo - refer the Bearish Kumo breakout (B)

3: Just as in last week, the Price is above the Kijun Sen and M VWAP 34 - This is Bullish .

3: The last two candles form a Piercing Pattern (Bullish). FYI, we studied earlier (click) that the Nifty showed a Bullish Engulfing with the last two candles, at this same time frame.

4. A Bullish Senkou Span cross seems imminent - may be neutral.

Here are some free reads for the weekend on the Pattern above...
http://www.thepatternsite.com/Piercing.html
http://www.moneycontrol.com/glossary/technicals/what-is-piercing-line-bullish-reversal-pattern_1680.html

Conclusion: Bulls have wrested back the advantage and have more than an even chance for a move up.

Saturday, April 21, 2012

S&P 500 - Triple Screen 'Technical Analysis' - Week: 16 April to 20 April, 2012 - Flat Truce..

Recap:

Last weekend we saw the Bears well entrenched in the short term (click).

Later in the week we studied the moves, that the Bulls made to Neutralize the Bears (click and click)

Price has followed our channel lines with Ninja Discipline.

As expected, the Moving VWAP34, was the resistance in the short term, all of last week.
Lets look at our three screens to find out the action points.

S&P 500: Long Term View (or) Month Chart with closing prices in a line graph (or) EOM Chart:

S&P 500 - End of Month Chart (EOM) - 20 April, 2012.

Three years worth of data is analyzed with the channel drawn above.
This screen has reversed from last week's positions.

Price is above all MAs once again.

Bears have lost the tiny toehold, they had last week.

The Bulls rule the long term view.

S&P 500: Medium Term View (or) Week Chart, each candle is 1 week's price action (or) EOW Chart:

S&P 500 - End of Week Chart (EOW) - 20 April, 2012.

We zoom in with white weekly channel lines as above, and study the last six months price action for a sharper picture.
We have a Bullish Harami (See links to some free resources below).

The White channel bottom has been support, for last two weeks...Bears are yet to crack it.

Price is back above most short term MAs, with no Bearish Crossovers.

Bulls would hope that the Bullish Harami, would mutate into a 'Three Inside up".

Bears would give another shot at the Channel bottom (white)

This screen is neutral, despite last week's price action.

Bullish Harami (low reliability):

http://www.traderslog.com/bullish-harami-weekly-candlestick/

Three Inside up (High Reliability):

http://www.leavittbrothers.com/education/candlestick_patterns/bull/three_inside_up_bullish.cfm

S&P 500: Short Term View (or) Day Chart where each candle is 1 day's price action (or) EOD Chart:

S&P 500 - End of Day Chart (EOD) - 20 April, 2012.

To get a sense of the most recent trend, we use the yellow day channel lines presented above, which covers about 50 days price information.
Price has rigorously followed the realigned channel lines.

M VWAP 34 has been the resistance yet again.

None of the MAs that we follow, have crossed over 'Bullishly' yet..

MACD histogram is just about in the postive.

Bear hold is nebulous, and they need to crack that White channel line soon.

Looking Forward:

MVWAP 34 (EOD) to our While Channel bottom (EOW), is the range to break, going into next week.

Longs would pin their hopes on the Bullish Harami (EOW), even if its reliability is low...

The Dow 30 - Ichimoku Study - Week: 16 April to 20 April 2012 - Bull Hold

......Regulars can skip below and go straight to the chart......

Introduction:

We do an weekly Ichimoku study, to complement our 'Triple Screen Technical Analysis', of the markets we study.

When taking the 'weekly' time frame, to use the Ichimoku Cloud, we need to consider...

The standard settings for an Ichimoku Kinko Hyo chart are 9, 26, 52 and are used on EOD charts.

When Ichimoku was created back in the 1930s, a trading week was 6 days long. So we have one and a half week(9), one month(26) and two months(52).

Now that the trading week is 5 days, we should actually use 7, 22 and 44 instead.

However, the majority of systems, worldwide, still use the old settings 9, 26, 52.

We need to study markets, on a weekly basis on this Blog.

How do we fit 52, 26 and 9 into that need? With one candle being one week?

There are 52 weeks in a year, 26 weeks form two quarters (or a half year) and 9 weeks equal about 2 months. Fits the old logic - albeit differently.

Presto, we have a longer term view with the same settings!

So, if you like to move off the beaten track, for a change...read on...

Quick Reference :

Chikou Span - purple line,

Kijun Sen - blue line,

Senkou Span A - black line,

Senkou Span B - grey line,

Kumo - grey shaded area,

Tenkan Sen - red line.

Useful resources (free) from the Web:

http://www.freestockcharts.com/

http://www.kumotrader.com/ichimoku_wiki/index.php?title=Main_Page

DJI 30: Medium Term View (or) Week Chart (or) EOW with the Ichimoku Cloud:

DJI 30 - End of Week Chart - 20 April 2012

Last 6 Signals seen on DJI 30 - Week Chart (EOW) marked on chart above:

1. Senkou Span Cross: Neutral Bullish Signal (S)

2. Chikou Span Cross: Strong Bullish Signal (C)

3. Tenkan Sen/Kijun Sen Cross: Neutral Bullish Signal (T)

4. Kumo Breakout: Bullish Signal (B)

5. The Flat Kumo: Bearish Signal (Ko)

6. Tenkan Sen Cross: Strong Bullish Signal (minor signal - see arrow)

1. Price crossing the Tenkan Sen (red line) is considered as an early warning sign of sentiment reversal. In this case back from Bear to Bull (reverse of last week - now we know why this is a minor signal).

Conclusion is same as pointed out last week, 'Bulls are still all over this screen. Bears need to stay below the Tenkan Sen to have a chance of taking this one over.'

Friday, April 20, 2012

EOW Technical Analysis, CNX Nifty - 20 April 2012 - Engulfed..

Nifty - End of Week - 20 April 2012

We concluded our last Intra-week post, with the note (click) that 5285 was important from a weekly perspective because of a "developing 'Engulfing Candlestick Pattern' - valid above 5285"

We got our close at 5291 and also our "Bullish Engulfing Candle Stick Pattern' as circled above.

Only wish the red candle was a little more engulfed....

Guess the market sometimes gives, but does not give :)

Anyhow one knows that the best continuation for this pattern, is the 'Three Outside Up Candle Stick Pattern"

Guess some weekend reads are in order, in the fond hope that above may fructify.

Bullish Engulfing

http://www.thepatternsite.com/BullEngulfing.html

http://www.forexkarma.com/candlestick-analysis.html

Three Outside Up

http://www.thepatternsite.com/ThreeOutsideUp.html

http://www.leavittbrothers.com/education/candlestick_patterns/bull/three_outside_up_bullish.cfm

Welcome Read

The Trading methods used here are suitable for those who (like me) are always Learners in the World Market (never presuming Mastery).

One learns with 'Technical Analysis' using Moving Averages, Channels, Time frames, Pattern & Candlestick Analysis, Fibonacci, Ichimoku Cloud, Oscillators & other Technical Indicators.

To comprehend the Dynamics of any Market, Peer Wisdom suggests, that we show plenty of Patience, keep it real Simple and adopt tons of Discipline.

We therefore use the same framework 'Patiently' every week - 'Simple' Technical Analysis Tools are repeated - The 'Discipline' of keeping a Neutral view is maintained.

So welcome to my notes - posted here for my Friends and Family.

Some Quotes..

There are times when playing the stock market that your money should be inactive - waiting on the sidelines in cash - waiting to come into play. In the stockmarket - time is not money - time is time and money is money. Often money that is just sitting can later be moved into the right situation at the right time and make a vast fortune – patience – patience. Patience is the key to success not speed.

Jesse Livermore.

That's been one of my mantras - focus and simplicity. Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it's worth it in the end because once you get there, you can move mountains.

Steve Jobs.

Discipline is the bridge between goals and accomplishment.

Jim Rohn.

Favorite Quote

"Why do we trade?

To be sure, trading allows us independence, the opportunity to work for ourselves. Trading also offers the prospects of a lifestyle in which evenings and weekends need not be consumed by work. Some of us crave the competitive aspect of trading, doing fresh battle each day. Others approach trading as a puzzle to be solved, deriving a sense of intellectual achievement. Finally, there is income. A successful trader can make seven figures in a year—and many of the traders I work with are living proof of that.

So why do they trade? Once you have the money, all of trading’s lifestyle advantages could easily be yours. Needs for competition and intellectual stimulation could be met in so many other ways. Why do traders remain traders long after they’ve won the game?

The great professions are those that serve as personal playing fields. They are the arenas we choose to express and develop ourselves. In mastering a discipline, we cultivate self-mastery. In writing a poem or placing a large trade, we capture—in a single act—our vision of how we see the world at that moment.

The great occupations are great precisely because they are such meaningful playing fields. Long after we’ve earned fame and fortune, the calling remains to be more than we are, to return to the arena and do battle with our limitations. The profound urge to extend the human grasp is common to all the great callings. To run faster, to capture more beauty, to predict ever better: in no small measure, our work is our pursuit of the godlike, however fleeting.

Maybe it is our different images of the godlike that animate our career choices.In work we find something divine within ourselves. Whether as scientists, monks, or traders, we strive for those moments when we are just a little closer to perfection, a little nearer to immortality. That is why we trade"

.... Brett N. Steenbarger

Inspiration

The Parable of Talents...

14 For the kingdom of heaven is as a man travelling into a far country, who called his own servants, and delivered unto them his goods. 15 And unto one he gave five talents, to another two, and to another one; to every man according to his several ability; and straightway took his journey. 16 Then he that had received the five talents went and traded with the same, and made them other five talents. 17 And likewise he that had received two, he also gained other two. 18 But he that had received one went and digged in the earth, and hid his lord's money. 19 After a long time the lord of those servants cometh, and reckoneth with them. 20 And so he that had received five talents came and brought other five talents, saying, Lord, thou deliveredst unto me five talents: behold, I have gained beside them five talents more. 21 His lord said unto him, Well done, thou good and faithful servant: thou hast been faithful over a few things, I will make thee ruler over many things: enter thou into the joy of thy lord. 22 He also that had received two talents came and said, Lord, thou deliveredst unto me two talents: behold, I have gained two other talents beside them. 23 His lord said unto him, Well done, good and faithful servant; thou hast been faithful over a few things, I will make thee ruler over many things: enter thou into the joy of thy lord. 24 Then he which had received the one talent came and said, Lord, I knew thee that thou art an hard man, reaping where thou hast not sown, and gathering where thou hast not strawed: 25 And I was afraid, and went and hid thy talent in the earth: lo, there thou hast that is thine. 26 His lord answered and said unto him, Thou wicked and slothful servant, thou knewest that I reap where I sowed not, and gather where I have not strawed: 27 Thou oughtest therefore to have put my money to the exchangers, and then at my coming I should have received mine own with usury. 28 Take therefore the talent from him, and give it unto him which hath ten talents. 29 For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away even that which he hath. 30 And cast ye the unprofitable servant into outer darkness: there shall be weeping and gnashing of teeth.

The Holy Bible: Matthew - Chapter 25.