Technical analysis: - Trend reversals using trend lines (Nifty, NSE, BSE) for SBI

Today we will see the reversal of the trend line in SBI chart in other words the trend which was followed by SBI from the month of May 2011 has changed from 10th Jan 2012 onwards as you easily figure it from the following figure.

Trends have proved to be friends so always stay with the trends never try to go against it. And this is where said that whenever trend shifts from up to down or down to up it gives us an opportunity to earn money in the stock market if it is detected during early stages.

Trend line is the early indicator which indicates that trend is going to change.

Trend line varies from person to person each of them use this indicator and draws the trend line according to their experience and factors they consider.

We have here drawn a trend line for the SBI chart by joining the peaks of the points which are tested at various periods.

So, two things need to be kept in mind while we draw a trend line: -

1. To draw trend line at least we should have 2 peaks.

2. These peaks should have distance of longer period like in this example we have one peak is month of May second and second peak is month of July and the third peak is in December month.

The above chart fulfills the criteria to be proved as strong trend line. Also to prove the strength various factors like volumes, RSI should be there to prove complete strength of the trend line. For the timing we will only consider the trend line and what factors need to be kept in mind before we draw it.

As you can also notice from the chart that SBI is reversing from the 10th Jan 2012 towards up side so it is good chance to earn money by investing in it.

Also see the following video which shows the trend line for SBI chart from www.tradingkamai.com: -



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Buy Call triggered for SBI

Our call for SBIN above 1990 triggered this afternoon put Stop Loss below 1940, this stock can rally so set Target for it is 2160-2200 in near term.

Happy Trading ....

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Nifty Technical Call on SBI and Century Textile

We had a mix trading this week, Nifty failed to cross 5400 which has became strong resistance now. Open Interest in Nifty is continuously falling from last four days, probably more traders are taking exit from Nifty and sitting on cash and observing the complete situation, we are experiencing lot of volatility in Global Markets as well. Once the picture is clear, Open Interest in Nifty or we can say trader’s interest in stock markets will come back again, till then no fresh position should not be taken in Nifty.

On stock front, very interesting thing is happening in SBI; we observed Downward-sloping reverse Head & Shoulders pattern is being formed.

Fig: - 1 SBI Day chart

In Fig. 1, it is clearly shown that volumes are low near top comparatively at bottom; we guess some kind of long term buying has happened in month of Sept-Oct 2011 when SBIN made bottom. Its Downward-sloping reverse Head & Shoulders pattern is forming now, but buying in this counter should come after some confirmation (breaking of neckline).

So what kind of confirmation we need for it???

RSI is near 55-57 and ADX is decreasing, overall SBIN is not in momentum, but we think when it cross 2000 level, more buying force will come and this will take SBIN in uptrend momentum.

Our call for SBIN is to take Long position above 1990 which is almost its last peak with strict stop loss below 1940, this stock can rally 2160-2200 in near term. Some profit can be booked in this range and remaining can be hold till 2500 level.

Other stock pick is Century Textile

One can buy this counter above 341 with strict Stop Loss around 326-328, Target for Century Textile is 360-370 in near term.

Why we are bullish in this stock???

It is crossing its 200 EMA and crossed 200 DMA, and its momentum is very high, ADX is increasing with price and RSI is at 65, also Accumulation & Distribution indicator is at its six months high.

See syllabus for Technical analysis training in Mumbai,India.

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