Few readers asked me how to spot a particular chart pattern formation, candlestick formation, reversals and so on.
A good charting software usually gives an explanation of the formula language it uses. While candlestick patterns can be found out by scanning the data with Boolean statements, a visual examination is necessary for other chart patterns like double top, inverse head and shoulder pattern etc.
It is to be remembered that charting software will only tell where a particular condition has occurred. The effectiveness of such formation has to be ascertained by the analyst.
Also, there is no "holy grail" or universal formula that will work in all market conditions. A crossover based on MACD or slow stochastics might work well in a mad bull market but it may not work at all in a dull, falling bear market. This is the reason I emphasize more on basics - support, resistance, chart patterns, candlestick patterns, volume and divergences.
We'll review the performance of these stocks (plus BLUEBIRD and GWALCHEM from previous post) after a while.
A good charting software usually gives an explanation of the formula language it uses. While candlestick patterns can be found out by scanning the data with Boolean statements, a visual examination is necessary for other chart patterns like double top, inverse head and shoulder pattern etc.
It is to be remembered that charting software will only tell where a particular condition has occurred. The effectiveness of such formation has to be ascertained by the analyst.
Also, there is no "holy grail" or universal formula that will work in all market conditions. A crossover based on MACD or slow stochastics might work well in a mad bull market but it may not work at all in a dull, falling bear market. This is the reason I emphasize more on basics - support, resistance, chart patterns, candlestick patterns, volume and divergences.
It may appear somewhat difficult initially but once accustomed to these formations, we can immensely get benefitted from the analysis.
In my previous post I discussed about "descending channel" pattern followed by a bullish breakout. There are five more India stocks in which this pattern has occurred very recently. The following table shows the NSE ticker, date of breakout and possible targets.
In my previous post I discussed about "descending channel" pattern followed by a bullish breakout. There are five more India stocks in which this pattern has occurred very recently. The following table shows the NSE ticker, date of breakout and possible targets.
| Ticker | Breakout Date | CMP | Target 1 | Target 2 |
| AARTIIND | 11/04/08 | 35.10 | 40.90 | 46.55 |
| GDL | 11/04/08 | 109.25 | 123.75 | 138.65 |
| GEOMETRIC | 09/04/08 | 62.95 | 77.00 | 83.50 |
| IILTD | 11/04/08 | 50.90 | 61.40 | 75.00 |
| MAHINDUGIN | 10/04/08 | 70.05 | 82.00 | 92.30 |
We'll review the performance of these stocks (plus BLUEBIRD and GWALCHEM from previous post) after a while.