Below article shows how swing trading can be done based on trend identification using technical analysis concepts & indicators like Dow Theory, Channels, Moving average and RSI.
There are different types of traders in a Financial markets. The one who buy and sell in a single day is called an Intraday trader. A variation to that are the ones who capture the swing based on demand and supply and rides the short term trend as long as it goes with trailing stop method. As compared to Intraday trading, Swing trading is less emotionally challenging as it does not require constant watch on market once you have a strong research based system in place that provides entry, exit and profit taking strategies.
Below we have shown 3 stocks and explained how Swing trading is possible based on Technical concepts like Channels, Moving averages and RSI.
Ajanta Pharma 60 mins chart:
The above 60 mins chart of Ajanta Pharma suggests that since October 2016 downward trend is ongoing. For swing traders it is important to trade in the direction of medium term trend which is negative from last 3 months. Looking at the channel support, any rally towards 1830 - 1840 along with negative bar formation near the channel resistance is going to provide shorting opportunity for swing traders. This will also ensure proper risk reward strategy. Reason to avoid buying is that the medium term trend is negative which is indicated by Moving average and channel. So the best of the trend can be captured in downward direction and so once the stock reaches the resistance levels and reverses from there we will get amazing risk reward ratio for big profits!
Mindtree 60 mins chart:
As opposed to above chart of Ajanta Pharma that shows downtrend, Mindtree on the other hand is clearly showing higher highs and higher lows that confirms that the trend is up. This simple technique is explained as per DOW Theory which is the foundation of Technical analysis.
Since start of November 2016 Mindtree is managing to protect the pivot lows. The stock has potential to reach towards the upper end of the channel near 540 – 545 levels as long as the pivot lows are protected.
Just Dial 60 mins chart:
It is interesting to see how two stocks from same sector can behave so differently. Justdial has continued to move lower in medium to long term downtrend. The outlook is similar to that of Ajanta Pharma shown above which is any pullback towards the level of 350 – 360 will provide good shorting opportunity once we see reversal signs from there. Channeling technique along with RSI is working well to capture the swings in the direction of trend.
The above charts simply represent how one needs to be patient for the trade setup to take place before pulling the trigger. We in our daily research report “The Financial Waves short term update” cover the important index stocks along with Nifty that shows application of Elliott wave, advanced technical analysis as well. Subscribe now and avail the NEW YEAR Offer in which on subscription of Equity research report you will get Monthly research report along with Nifty trading strategy absolutely Free. For more details Contact US here or write to us at firstname.lastname@example.org or whatsapp on +91 9920422202, Tel: +91 22 28831358.