Anticipation of Reversal

Amidst Greek crisis, market remained in Bears control for the whole week. Almost every indices sagged and Sensex shaded 4.5% while Nifty 4.9%. But ,if we believe on technicals, nifty and bank nifty is all set to bounce back. So we are on the verge of witnessing yet another reversal

As clear from the picture above that on 7th May , 2010 Nifty has formed a Doji, that too after a gap down. And Doji after a downtrend is a harbinger of reversal.

And if we plot Bollinger Band on Nifty May future, it supports our claim of reversal since the Doji is not only formed on lower band but its lower half remains outside the lower band. One more thing is apparent from second picture, that is last four candles have been in touch with lower band as well. This is not a common event, it happens when a unusual event affects the price movement of an equity or index and the price movement deviates from its normal course.

Technical Analysis

I still remember when I used to be a naïve to Technical Analysis. The remembrance of some of the mistakes I committed in those days makes me laugh. How stupid I was. But that’s the way one learns if he/she doesn’t have any mentor or godfather. I too started learning by and with mistakes. In my early days I picked stocks who had seen a drastic drop in recent days. The notion behind the selection was “ the stock has already dropped a lot , now its turn to move up” .


Well, later I learnt about moving averages and still believes that moving averages are crude and simplest way of learning technical analysis.

If we firmly believes the existence of TA doctrine and want to encroach upon, moving averages gives us easy way. A beginner doesn’t know when to buy or when to sell. So moving averages, if properly handled , give enough guidance to keep him from incurring prospective losses.

Below are some pictures of NF with 50 moving average and even a naïve can understand the timing of buy/sell. It a simple beginning.

Today was a wonderful day as I witnessed the occurrence of one of the rare candlesticks on EOD chart.
I have been observing UCO bank for past couple of days and most of my studies proved right except the one when I saw a red candle on peak on 26th. I anticipated an evening star formation and out of excitement I forgot that evening star is three candle pattern and in haste I took wrong decision and fortunately I reversed the trade next day. (instead of waiting till I repent).

See the candle at top that has no shadow. It is candle that is usually not found. It has no upper or lower shadow. You can say shaven head and bottom.

Now its kinda discovery; finding something in realty that is been read in theories. Im really excited to explore more of this candle and belevive me Im busy finding more such candles on EOD charts. And after seeing almost 50 charts I haven’t found yet so we can believe its claim to be a rare candle is true.

This is Marubozu candle denoting a bullish price movement. Rather say extremely bullish. It suggest that bulls dominate the whole session. Its basically a continuation pattern so we can anticipate further surge. Lets see the impact of Marubozu.

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