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Wednesday, March 11, 2009

Bullish Harami

Sensex showing Bullish Harami

After going back to my textbooks --Steve Nison's Beyond Candlesticks, I have concluded that, the pattern of the last two days trading on the sensex , is a bullish harami, which is the candle charts version of an inside day of the bar charts.Though, in case of a Harami only the real body (range of open and close) of the second candle needs to be engulfed by body of the first candle.

As per Nison, the colours of the candles forming a Harami Pattern, can be white/white, white/black, black/white and black/black. (Please note, white is an upday and black is a down day). Their bullish or bearish nature depends on the preceding trend. Harami are considered potential bullish reversals after a decline and potential bearish reversals after an advance.No matter what the color of the first candlestick, the smaller the body of the second candlestick is, the more likely the reversal. If the small candlestick is a doji (doji is a candle with open and close almost the same), the chances of a reversal increase.

Because the first candlestick has a large body, it implies that the bullish reversal pattern would be stronger if this body were white. The long white candlestick shows a sudden and sustained resurgence of buying pressure. The small candlestick afterwards indicates consolidation. --courtesy stockcharts.com (I was too lazy to write it on my own) To come back to the sensex,

  • the candle of 6th March (first day) was a long white candle ,
  • with higher volumes than the candle of 9th March(second day).
  • The second candle is completely engulfed by the first candle.
  • we are in a downtrend from a long long time

So thursday's trade will confirm whether we are starting a rally which may sustain for sometime. Please let me know your views.

Lakshmi Ramachandran

vipreetsafetrading.com


12 comments:

Anonymous said...

Pattern for Nifty: 12/3-Up, 13/3-Dn, 16/3 to 20/3-Up, Dip 20/3 and up 23/3. 23/3 is likely to be the next swing top (6/3 was the swing btm) with tgt of 2760-80. If i go wrong 20/3 will be a swing bottom. That looks highly unlikely.....

Lakshmi Ramachandran said...

I did not understand anonymous! It is more important to look at the larger picture. Also everything is a probability, so stops in proper places, please!
lakshmi

Sujatha said...

Good explanation..

I read this pattern recently in "Business Line", that time thought of you for asking.... luckily u have explained clearly with charts.

Why i didn't ask u is... simple... first let me grasp what u r posting and writing in your school...and will get back if i have any doubts... if at all the master is good... wat to ask...

Thanks a lot for your hardwork...

Anonymous said...

The turn dates are based on my proprietary system. I dont use any price-based probablity system as a technique to trade. The next swing top is 20/3-23/3 with a price tgt of 2760-80. Dates in between represent smaller one day swings. the Last swing bottom was 6/3 and if you are a positional trader you would go long(at what ever price point you are comfortable) with a stop at 2550, tgt as mentioned as per the dates. If i go wrong 13/3 is a swing top with 2680-2700 as tgt and 20/3 swing btm with tgt lower than 2500, but that looks unlikely.

Lakshmi Ramachandran said...

anonymous, so as per your system, it is possible that there will be no new bottom for the time being?

sujatha thanx for being my most avid reader

Anonymous said...

2500 unlikely to be broken in March. the next swing date after 23/3 is 27/3 which i expect a low at 2600-2620. I can tell you arnd 25/3 the likely tgts for april. As of now Nifty seem headed dn from 23/3 for about a month till 24/4. hv net 15dn days between 23/3 to 24/4 , app loss of 30-40pts per day woud mean a net fall of 400-500pts in that period. you could be looking at a tgt of abt 2250-2300 by 24/4. But a final bottom is likely only arnd mid june.

Lakshmi Ramachandran said...

anonymous
So the bullish harami may play out as the low will not be violated for the time being. please join my discussion forum at www.vipreetsafetrading.com so we could interact there instead of here.

Unknown said...

Sorry...I dont discuss in open forums. There is world of technical analysis (more precise) than what you might be using currently. If you are keen(interested) pls write to me privately at sdeepakn@gmail.com

Lakshmi Ramachandran said...

Sure would defintely like to know your method. Always open to learn new methods

Sujatha said...

@ Anonymous - I read your postings here, really my mind is swinging like NIFTY and the swing system, cos i am new to this swing trading. Can u please eloborate your method in forum? - that will be helpful for the swing traders. If you don't mind please start from the beginning what is what? hope lakshmi'ji will agree.

@ Deepak - Why at personal id? please consider to discuss in forum itself, so that beginners like me will get benefitted and always be grateful.

Lakshmi Ramachandran said...

Sure I agree. I am inviting him once again and have also said i will start a new sub forum for him

vishal said...

hi lakshmi.......
i am currently doing mba in finance........
can u please tell me how should i begin.....to understand nifty graphs..........