Ascending Triangle in Tatasteel - 25 Sep 09

Tatasteel Chart - Daily:

On daily charts Tatasteel formed an Ascending Triangle. Will observe the price action at 490 levels to buy for smaller term.

PS: Nifty reached the first target of the Butterfly pattern

Technical Analysis on Reliance - 14th Sep 09

Reliance Chart - Daily:

Reliance has formed an Ascending Triangle in daily charts (not a perfect one). It gave a break out from the Triangle, but the volumes are not very convincing. Today it took support from the Neckline of the Triangle. Long trade can be taken with the stop loss below the support trend line or 1918. Target may be the height of the triangle at 2500 level. 2270 may act as next immediate resistance.

I would not prefer to take new trade at this point of time. As Nifty is still in indecision so risk would be more then reward.

I have posted a long entry in Reliance when it formed a Bullish ABCD Pattern (Gartley with double bottom) at 1870 level. Which reached the targets of ABCD pattern immediately and reached the extended target of 2190 later on.
Reliance gave a wonderful opportunity to re-enter long trade on 4th Sep, But I didn't utilize it as I was holding some other scrips at that point of time.

Short Term Market View - 10 Sep 09

Nifty Chart - Daily:

Nifty formed an Ascending Triangle pattern in Daily charts. But, the breakout of the previous highs (resistance) is not very convincing to launch fresh longs and start expecting more upward move. Low volumes reflect week supply and not strong demand. Its wait and watch period in my view. I am hoping that after some up move, market would come back for a re-test of this resistance line (around 4760-4770). A break out or breakdown from the re-test levels may lead the trend. This point may be a safe entry for fresh longs or even for shorts on a breakdown, which may convince this up move as a false breakout.

Sensex Chart - Daily:

On the contrary, Sensex has formed a Raising Wedge, which is bearish. If the resistance line is broken up, then wedge would be invalid. Interesting times!

Nifty Intraday Technical Analysis for 3rd Aug 09

Nifty Intraday Chart - 5 Mins:

Nifty Formed an Ascending Triangle from last Friday, today it gave a breakout. Today it retraced exactly up to 61.8% of the first wave of the Ascending triangle, forming a good harmonic Triangle pattern. But the spread of the bar and volumes at the breakout are not very convincing. Nifty consolidated just above the resistance line of the triangle and gave the breakout from the sideways move to push the prices upwards.

Nifty Technical Analysis For June 25th

Yesterday’s Recap (June 24th):
Nifty opened near June 23rd high, which is inside the up sloping Channel. After opening it showed weakness and started drifting down and threatened to breakdown from the Channel. It gave false breakdown with low volumes, but the breakdown was very small can be considered as minor error. Then price took support form the support line of the Channel and moved just above support line to sustain. At mid of the day it zoomed up and broke the Ascending Triangle resistance line with volumes but it stayed inside the Channel till the end. Below is the 5 min chart of Nifty Futures:

Cues For Today (June 25th):
As I already mentioned longs could be hold with Ascending triangle's support line as stop loss, and Nifty broke the resistance trend line yesterday convincingly and successfully retested it.

On the higher side, Channel resistance is now at 4330/4340 levels (moves up by time). Bearking that may take Nifty to 4390/4400 levels. If 4400 levels are broken convincingly then it may reach the resistance line of the Expanding Triangle!!

On the lower side now Nifty formed good number of support zones

1. Upper line of Ascending triangle at 4278
2. Support Line of Channel
3. Gap Support at 4160, may not break today.
4. Support Line of Expanding Triangle, which is too far, may not reach today.

For today channel support and Ascending Triangle Resistance line fall nearby which may become good support zone for Nifty. If it is broken down the Nifty may show weakness. On the overall Nifty may show some strength today ,if it breaks above the channel resistance line. Below is the 20 min chart of Nifty Futures:

Update: Ascending Triangle in Nifty - June 24th

Update on Ascending Triangle in Nifty. Ascending triangle breakout was confirmed with good volumes, but after that Nifty saw stiff resistance near Channel resistance line. A clear increase in volumes are visible after the break out, which signifies accumulation and supoprts the Ascending Triangle's breakout. Nifty may reach the target of the Ascending Triangle 4390 levels, when the Channel resistance is broken up. Will update the macro view on Nifty as usual later tonight. Below is the 5 min chart of Nifty Futures:

Update on June 27 10:30 PM:
Target for Ascending Triangle is reached on 26th June. Below is the 5 min chart of Nifty Futures:

Ascending Triangle in Nifty

Ascending Triangle in Nifty Futures. Big Volumes at the break out are must watch out

Anatomy of Chart Patterns: An interesting note about geometric patterns

Geometric patterns formed systematically, with minimum or no influence from external factors on the market show interestingly predictable moves as seen in the below chart

The pattern shows symmetry in the price and time it took to reach to the target

Anatomy of Chart Patterns: Ascending Triangle

Ascending triangle is a Bullish pattern and is exactly the reverse of the Descending Triangle. Like descending triangles form near support zones, Ascending triangles form near the resistance zones. We can see this kind of pattern usually after a swift up move and price is near strong resistance zones. In Ascending triangles supply is distributed at single price level, so here the resistance line is horizontal and the support line is up-sloping and touches the resistance at the apex.

How the pattern is formed:

1. Whenever price comes to resistance level, it tends to move down from that point as it witnesses more supply.
   
2. When the demand is in an increasing trend, the price takes support from a level above previous support point.
   
3. Price ping-pongs between the support and resistance line giving a visual impression of a right-angled triangle.
   
4. Since there is no clarity in the price trend, market participation declines and should be clearly visible with draining volumes
   
5. After some supply tests at the resistance line, if the supply is totally absorbed by the buyers and price will break the resistance line.
   
6. As the critical resistance line is taken out, the increased demand accelerates the up move.
   

Criteria for a successful Ascending triangle:

• Should give breakout or break down in between 50% to 80% of the distance to the apex. If prices break out after 80%, probability of the pattern success declines.
  
• Volumes should drain while the pattern is forming, which indicates thrust buildup
  
• Note the volumes when ever the price meets the resistance line. A lower volume from previous price-resistance point is a good indication that pattern might give break out.
  
• At the break out, higher volumes and wider spread of the candle gives confirmation.
  
• While drawing the resistance and support lines of the triangle we need to go with highs/lows. If we lines are breaking some candles we need to look for the error percentages and volume. Low volumed errors can be ignored, but not high volumed. Tick data helps here some times.
  
• More white space should not be visible, between the waves.
  

Below is the 5 min chart of JP Associates, as an example of a reversal:

• Our analysis starts only after two highs and two lows are formed and joining the trend lines through them resembles a right angled triangle, where the right angle is on the left top.
  
• Notice the falling volumes. It is OK to have some random high volume bars, but the overall, volumes should confirm to a diminishing look visually.
  
• Price moving in a very narrow range and the volumes are almost dried up due to uncertainty of the trend.
  
• At one point, price gave the breakout with and heavy volumes confirm this.
  
• Price bounced back to retest the supply line. The retest may not always touch the trend line, and in some cases may not happen at all. But retest acts as a push back from the resistance line and adds more thrust to the up move.
  
• Now the bulls clearly won the battle, demand is increased drastically and as the losing side close there short trades and new participants came in price moves up with wide spreads and increasing volumes.

An example of Ascending Triangle as continuation pattern:

Nifty (Futures) Analysis on Short Term

Today Nifty moved up with lower volumes. Possible ascending triangle pattern is visible on hourly charts. I am considering small raise in second peak as a cautious error, chances of forming raising wedge is also there, which can totally change the plates. So the next high peak is very crucial to decide the fate of this pattern.

Support of ascending triangle trend line is very important now, if it breaks we may see the reversal of the trend in short term and this up move could be just retest of the support trend line for fall further.

Reliance Intraday Analysis for 29 April 2009

Reliance opened gap up due to strong global conditions. Then started moving up, as a consolidation ascending triangle is formed, showing more bullishness. After some sideways move on low volumes, it zoomed up till the end of the day.

Below is Reliance Cash intraday chart on 5 min time frame.


My Trades:

• Short triggered at 1767, just below the resistance line.
  
• Reversed to long at 1772 after ascending triangle gave a Break out, with the stop loss at 1767.
  
• Closed long at 1805 at 3:20 PM
  
• Total Profits Rs.28 (2%) in two trades.