Wednesday, March 23, 2016

Nifty: Moving Average difference indicator to identify change in BIGGER TREND!

How to use Moving Average difference indicator to identify that the existing trend has reversed?

Below article focused on application of indicators and what does it indicate from medium to long term perspective -

Nifty had another positive close yesterday after a small correction on intraday basis. Majority of stocks continued to move higher and a few stocks like DLF, TataSteel, SBI looks like giving a strong positive break after brief consolidation. As mentioned in earlier updates one should avoid catching a top in current market and surprises will be on upside.

Nifty daily chart:


Following explains why this time the uptrend is different than that seen previously during the fall of 2015. As shown in first daily chart, the momentum so far is strong and rise of such magnitude without any meaningful retracement was not seen during the entire period of down trend that started in March 2015.

Difference of Moving average:The difference of Moving average indicator shown below the price chart has managed to decisively cross above the resistance blue line thereby indicating that the momentum is much stronger this time compared to the previous rise. Also there is still room on upside as the extreme reading seen just before the downtrend started was 270 and the difference of average currently is at 168.

Volumes:Volumes have continued to stay above normal during the entire period of 2016 and Nifty is now at the level seen in December 2015. This above average volume indicates buying interest and accumulation which increases the odds that there can be a positive breakout …………

From wave perspective we are still keeping the possibility open that the current up leg is either wave ……. or wave ………..

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