Understanding the trend is the most important aspect for a trader to make money in financial markets. While using tools of technical analysis like candlestick patterns and indicators, a prior knowledge of the basic trend of the market is vital to improve odds of success in trading. Let’s get started and first understand what is a trend.
Last Thursday, the Nifty broke out of the 7971 level decisively on a Daily and Weekly chart (as shown by Auto-Support/Resistance blue lines in the chart below). The rise in volume on the breakout is clearly visible on a Daily chart, and is clearly a good sign that the rally is backed up by strong volume, and hence has a good chance of success. Continue reading
Average Directional Index or ADX is an oscillator that is used to determine the strength of a trend. It is a good indicator that gives a confirmation of trend. Since, trend is an important concept in Technical Analysis, it can be a good indicator in any Technical Analyst’s arsenal. Continue reading
Trend is one of the most important concepts to understand in Technical Analysis and this post explains why. Trend is defined in Technical Analysis as the direction of the market and can be of three types: uptrend, downtrend and sideways trend. If the direction of the market is upward, the market is said to be in an uptrend; if it is downward, it is in a downtrend and if you can classify it neither upward nor downward or rather fluctuating between two levels, then the market is said to be in a sideways trend. Continue reading
Often times, I find traders use technical indicators and follow their Buy/Sell signals blindly, without really understanding how that indicator is to be used. One of the first thing you have to know when you use an indicator is to know what category it falls in. The majority of indicators out there are either the oscillating or trending type. Continue reading