Nifty Yahoo Charts

View Online Yahoo Intraday Chart of Nifty Regular and read comments below as to How to interprete chart ?

Jeetendra Mistry

http://in.finance.yahoo.com/q/ta?s=%5ENSEI&t=1d&l=on&z=m&q=c&p=b,p,e20,e50&a=ss,r14,p12,m26-12-9&c=

How to interpret the Chart of Nifty:

The Chart available is of Nifty Regular – the underlying of the Nifty Future.
The adjustment may be made for difference prevailing between Nifty and Nifty Future.

The first of four available charts is of Price-chart in Japanese candlesticks.
Hollow Bar shows Bullish candle, meaning OPEN is lower and CLOSE is higher.
Filled Candle shows Bearish Candle; meaning OPEN is higher and CLOSE is Lower.
The Price Chart has TWO Exponential Averages of 20 Minutes and 50 Minutes.
The Indicator to be used as under:
Trend is BEARISH if “Current Price < 20 EMA < 50 EMA” - GO SHORT
Trend is BULLISH if “Current Price > 20 EMA > 50 EMA” - GO LONG
CORRECTION (RESISTANCE) or REACTION (SUPPORT) at any time is near 20/50 EMA.
Major Trend is Bullish, if 20 EMA > 50 EMA, even if Prices hover little below 20EMA and vice versa. Reversal of Trend must be considered only on crossover of 20/50 EMA.

The other studies included in Price Charts are PSAR – Parabolic Stop And Reverse.
RED DOTS above any Candle is Effective Stop-Loss for any SHORT POSITION.
GREEN DOTS below any Candle is Effective Stop-Loss for any LONG POSITION.

Another Study is Bollinger Band, depicted by two GREY LINES above and below Price Candles. The price candle touching the falling bottom line (of widening Bollinger Band) is BEARISH signal, predicting faster but short-lived downfall and vice-versa.
Similarly, contracting lines of Bollinger band predicts Breakout on any side and Price Candle starting with touching upper BB is bullish signal and vice-versa.

The Second Chart is of RSI – Relative Strength Index, which varies between 0 and 100 at any point of time. The Reading above 80 is considered OVER-BOUGHT ZONE and Return Journey from 80+ to down is SELL SIGNAL
And the Reading below 20 is considered as OVER-SOLD ZONE and Return Journey from 20- to above is BUY SIGNAL.
This signals need to be interpreted with third chart of Stochastics for Effective Signal. The Average Line around 50 is also sometimes, Effective Support/Resistance signal, as very strong trend may reverse from this mid-point only.

The Third Chart is of STOCHASTICS, which has two lines – Faster, and Slower and both ranging between 0 and 100. Like RSI, 20 and 80 are levels to watch; but in Stochastics, additional tool is of Faster Line cutting Slower Line from ABOVE/BELOW.
BUY and SELL signals are generated in same way as for in RSI chart. Additionally, the Readings below 20 may continue with force, just to reverse trend equally forcefully, but for a shorter time only – AND VICE-VERSA.

The Fourth Chart is of MACD – Moving Average Convergence Divergence. One is Base Line, which is depicted by FILLED AREA and RED LINE is Average Line of Base Line.
The range of movement may vary from Negative to Positive Zones – values not to be considered. Return Journey from Negative to Mean (Neutral) Zone is Bullish Signal and Return from Positive to Mean (Neutral) Zone is Bearish Signal. But Trend may be considered as Bullish in Positive Zone and Bearish in Negative Zone. Coupled with studies above, necessary interpretation may be drawn.

Another chart may be of ROC – Rate Of Change, which has 0 as base line and –30 is oversold region and +30 is overbought region. Markets normally give reversal signals even without touching those extreme points. The markets sometimes have tendency of reversing up to 0 level only, to set back to original trend.