Wednesday, October 3, 2012

Agri: The power of “Channels and RSI” in technical analysis...

The following is picked up from Contact information:  Email: Follow us on Linkedin / Facebook / Twitter: Waves Strategy
Bottom line: We all observe channelized move in Equity, currency and MCX Commodities. But interestingly we have found channel move even in agri commodities. Below is the chart of Mustard seed (Rm Seed) which has been brilliantly moved within the channel in both the trend. Along with channel, momentum indicator RSI moved between the range of 30 and 70 which was acting as a support and resistance respectively.
Rm Seed Daily chart:
As shown above in daily chart of Rm Seed, from mid june 2012 prices had an excellent move from 3600 levels and moved higher in the blue channel by forming higher tops and higher bottoms and made a high of 4500. Thereafter prices consolidated sideways and in the mid of august 2012 it has formed top near 4530 and moved lower by taking support and resistance of the red channel.
We can observe above in daily chart, whenever prices has found resistance of the channel it has tested the RSI of 70 and exactly turned lower from the same level. Momentum indicator RSI is another simplest way of analysis which works accurately in the trending move.
In short, if you want to catch the trend in any of the direction then follow the two simplest ways of technical analysis i.e. parallel channel and RSI. This decreases the chance of whipsawing and increase the probability to run the trend.

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