NIFTY MONTHLY CHART :
TRENDLINE : THE ABOVE CHART IS SELF EXPLANATORY WHERE NIFTY HAS FAILED TO CROSS THE TRENDLINE .
APRIL 2010 : NIFTY HAD TOUCHED THE TRENDLINE BUT HAS COME DOWN FROM THERE, BUT AS THIS IS ONLY START OF THE MONTH WE WILL WAIT AND SEE IF THE TREDLINE IS BROKEN OR NOT BY END OF THE MONTH
VOLUMES: IN JUNE 2009 WE HAD SEEN THE HIGHEST VOLUME EVER , BUT AFTER THAT THERE HAS BEEN CONSTANT DECLINE IN VOLUMES IN EVERY MONTH
a comment about trend lines drawing. Trend line drawing must follow certain rule otherwise theoretically there are infinite points on a chart and any any two can be connected to form a trend line and one of such trend line will always be aligning with market data giving a false sense of confidence.
ReplyDeletethe key and common suggested rules about trend lines are -
for an up trend, join the support (bottom) points. These are the points which are driving market higher by holding support.
for down trend, join the resistence (top) points. These are the points keeping the market in check.
some also suggest a concept of "significant" low/high point to determine which two points to join for trend line. A significant low can be defined as a low where prices N days before and ahead (if available) are above the low. Of course, higher the value of N, lesser number of such points on the chart and stronger the significance of the trend line/support point.