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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