Wednesday, January 10, 2018

Nifty: How to determine price strength using Bar technique?

Nifty has been closing at life time high levels but have you seen a single candle giving a close of more than 100 points? Think again! Technical analysis methods do not always revolve around only looking at indicators like RSI, ROC or Moving averages. There is much more to it.
See below a very different way of looking at momentum.
Nifty daily chart: published today morning in daily research report

Bar technique - A very important observation is if you look at the close of Nifty since 7th of December 2017 there has been not a single day where prices closed with gain of more than 100 points. Also this was seen last only on 7th December which was reversing the earlier short term downtrend. Forget about the close, the difference between high and previous close has also been less than 100 points except that on 18th December which was Gujarat Election outcome day. On 18th as well prices closed mere 60 points higher than previous day. So, when everything is so euphoric Nifty has been simply lacking the required momentum even now.

Another important fact - over past 22 trading days on an average daily basis Nifty has gained mere 16 points. So, after completing wave …….. near the lows prices have simply failed to keep up with euphoria in wave ………. This is typical property during last legs that creates enough euphoria but prices only drift without strong bar formation. Nevertheless, we will see if Nifty manages to give a close of more than 100 points which will precursor for current rally extension as it approaches near important trendline resistance.

In short, move above ……… will keep short term tone positive which can drift prices ……………

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