Om Sri Ganeshaya Namaha

Om  Sri  Ganeshaya  Namaha
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Monday, April 14, 2014

Looking For Tops



No ! I am not expecting a Top! I just follow the trend till the bull says "I am tired and want a rest" .

I chose to write about this topic as the robust rise which has, as always,  taken most market participants by surprise, is keeping one wondering at every rise whether a Top has been made.

Protecting hard earned gains becomes an obsession  and more often than not a short period of weakness is often mistaken for the actual top, leading to selling their hard made investments much before the trend is over.

Tops  never happen in a day.It will tease before giving in thus making it a somewhat long process.  Keeping some simple rules and events in mind will help ride this wild bull.

  • Stop looking for short term gains.You earn more peace of mind and money by looking at the larger picture.
  • If after a move into new high  there are several days of  increased volume with either very poor price progress or actual declines then a top may have been made.These are called distribution days.
  • Look for a close below an important trendline.Looking for a two period close below it would be sensible. Normally it should be the trendline joining the lows of the move that you are trading. If one is riding the current uptrend from August 2013 lows then we look for a close below the uptrendline drawn from that low.
  • There is a red alert if a high is made, reaction sets in, desperate attempts are made to cross that high but instead the low made during the reaction is easily taken out instead. This is called a failed test of the previous high. This shows bears are  gaining strength.
  •  Look for a close below the swing low established after either of the above --break of trendline or failure to test previous high-- event happens.This will be the final confirmation of a top having been made.
  • During the  topping out process, the indentification gets  easier if topping technical patterns like the Outside Bar, Inside Bar,Rising wedges,Head and shoulders, and candle patterns like, Bullish engulfing,Evening star, Hanging man and Shooting star occur. 

There are several other methods but this is the basic and most reliable.Comments and any additions to the above are welcome.

 

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Happy Trading !!

Lakshmi Ramachandran
www.vipreetsafetrading.com

Sunday, March 9, 2014

It is the IT Sector's turn to Reverse !



Weekly Chart 




 The above weekly chart shows how the  "Outside Day" reversal pattern - shown in red elipse - on the weekly charts of the IT Sector Index has warned of a reversal with regularity.Occuring on weekly charts makes the signal stronger.

Outside days are days where the current candle is both higher and lower than that of the previous candle. 

The pattern has occured once again alerting of an impending reversal !!




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Happy Trading !!

Lakshmi Ramachandran
www.vipreetsafetrading.com

Monday, March 3, 2014

An Evening Star - A Powerful Bearish Reversal Signal


Daily Chart



 An evening star pattern formed on Dr.Reddy today.The gap up made on Friday the 28th February , the long upper shadow which makes the candle a bearish shooting star which formed on huge volumes and the bearish candle which closed the gap today makes the reversal signal stronger.     


This coming after a spectacular run up increases the probability of a reversal.






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Happy Trading !!

Lakshmi Ramachandran
www.vipreetsafetrading.com

Saturday, March 1, 2014

Reversal Signals in S&P500 ?



Monthly Chart 




The S&P 500 has had a dream run , which probably remains a dream for most participant. The monthly charts have formed an Outside day pattern which is a reversal signal. 

 Outside days are days where the current candle is both higher and lower than that of the previous candle. Outside days mark greater volatility in  price for that day.In the case of S&P500the current candle engulfs previous three months range indicating the possibility of reversing is higher.

 Watch out if the low of the candle at 1738 breaks !




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Happy Trading !!

Lakshmi Ramachandran
www.vipreetsafetrading.com

Saturday, February 15, 2014

Gold Getting Strong !


 
Daily Chart 



 Gold has gotten strong with , 

A breakout from the downtrending channel, successful test of it's resistance line and breaking out of the high made on the breakout at 1280.
A breakout from an inverted head and shoulder pattern giving a mouthwatering target given to subscribers well in time to take advantage of the breakout.
The 20/40 Ema have given a buy.

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follow me on twitter http://twitter.com/#!/lucksr

Happy Trading !!
Lakshmi Ramachandran
www.vipreetsafetrading.com