Ranbaxy Labs

RANBAXY took a drastic beating for reasonzs known to all who r in stock markets.

I have been following it up closely. All bad newz all bad events have been surrounding Ranbaxy since past couple of days. 

I write below of all what I have learnt and cud make out from d charts of Ranbaxy.

1. A falling knife formed a Bullish Doji day before and a Bullish Harami today.

2. A positive divergence of MACD is seen today.

3. Stochastic s Positive Divergence formed.

4. RSI Rising from Oversold Levels.

5. Positive Divergence seen in ROC.

6. HPI Taking a U Turn.

5. ADX Trend Strong Negative.

Considering all these points on a Daily Chart there are indications of Ranbaxy reversing its trend. 

But these are just indication. One has to wait for confirmations.

What are d confirmations??

Well considering all d above points.. Keep a close watch for this to happen

Tick Up of MACD Histogram, with Stoc crossing up 20, RSI crossing up 30, and the ADX taking a u turn which is at its strongest negative trend. 

When these indicators get in a momentum the making the ADX turn down.

This is not a buy or sell write up. 

This is just to keep a close watch and to increase expertise in stock markets by studying stocks which are at risk or are highly unpredictable due to some reason or other. 

Ranbaxy Labs

Ranbaxy Lab is showing a positive sign as of now @ 11.30 AM. If sustains above this level then it may witness a upmove.

MACD ADX Strategy

                     

The MACD and the ADX are the most powerful indicators. But the most important fact of stock markets is to bypass false signals and false breakouts. Various parameters have to be combined to take the right pick at the right time in direction of the trend.

Here is a simple MACD ADX strategy that can be opted to trade.

Buy Strategy

1. MACD Zero Cross Up and

2. +DI should be greater than -DI

or

1. If  MACD is above Zero then wait for +DI and -DI positive cross overs to happen. But an early entry can be made if at this point the ADX is above both DI's and had just turned down signalling a change in  current trend.  

Sell Strategy

1. MACD Zero Cross Down

2. -DI should be greater than +DI

or 

1. If  MACD is below Zero then wait for +DI and -DI negative cross overs to happen. But an early entry can be made if at this point the ADX is above both DI's and had just turned down signalling a change in current trend.  

Other precautions to be taken are :

1. Watch the price levels with respect to Bollinger Bands. If a positive trend is seen in formation and the prices are at lower Bollinger Band then keep a target of middle Bollinger Band. Similarly if prices are at middle Bollinger Band then keep a target of upper bollinger band.

2. Watch the Prices at crucial EMA crossing like the 200 Day EMA.

3. Watch the Herrick Payoff Index which is a combination of Volumes and Open Interest can be used as a yardstick.


4. If prices are in uptrend for a long time with the MACD above zero for a longer period and there is a DI Positive Cross then, its better to do a very detailed analysis before entering into the stock.

5. Use your favorite MACD and ADX values and do proper back testing for various ADX and MACD values and then set the best suited for your markets.


Please Feel Free to post your comments.

NIFTY

Cairn India Ltd

Cairn India looking stromg at current levels

Power Of Combining Indicators

Here's what suddenly struck me while analyzing charts.

Before going ahead with what I noticed let me revise the indicators.

For newbies the MACD and ADX are trend indicators while RSI and ROC are major oscillators.

The crucial levels of MACD are zero cross up and down. Turn up and Turn down below and above d center line respectively.

The ADX crucial levels are ADX rising from 18 towards 20. The DI crossovers and Major strength with ADX above 30 and greater than both DI's takes a down turn.

The RSI crucial levels are 30, 50 and 70 crossovers.

The ROC major levels are zero crossovers.

Well after have refreshed these indicators lets begin with what I could analyse for which I have put in some random samples of various charts in different time frames.

The ROC and MACD crossing zero levels simultaneously in either direction with the RSI marching in the same direction and ADX poised for a change in trend or forming a strength in the same direction creates a momentum to push the stock.

This is just a basic raw ground work. The technical stalwarts like Prachi Selvan Karthik Marar Archana Mankar Wave Rider Muni Prasad Gutha and others can further explore this and can take it further to newer and more quantifiable and result oriented levels.


The charts posted are of Indian Stock Markets nevertheless the ideas can be grasped and grown upon and utilized by any stock markets.


NB : Prachi Selvan, Karthik Marar, Archana Mankar, Wave Rider, Muni Prasad Gutha are all available on FACEBOOK

NIFTY

After many requests I am posting d NIFTY chart. Expert comments are welcome.

As usual i am pasting 3 time frames Hourly, 240 Minutes and Daily charts.

Studying the 3 major indicators MACD,ADX and ROC.

On the Hourly charts the RSI is showing a positive div.., while the trend is not yet formed , the candles have formed some sort of base since last few sessions. MACD is just above the zero line which is crucial while the ROC has turned up again with the DIs poised again for a positive crossover. There is also a slight Positive div in +DI.

On the 240 M charts d trend is moderate negative but with a positive ROC div., and positive Histogram div. Also taken a support of 200 EMA.

On the daily charts the ADX is again poised for a change in trend. While the HPI and Stoc showing a positive divergence.

Methods to Detect Divergences

Divergences are a bit difficult to programme. Divergences are best checked visually.

There are many different ways to check for divergences.

1. One of the simplest is to use Rate of change indicator and EXPLORATION feature of Automatic Analysis window.

// 5 day rate of change of closePriceUp = ROC( C, 5 ) > 0 ; // 5 day rate of change of MACD histogramMacdUP = ROC( MACD() - Signal(), 5 ) > 0; BullishDiv = NOT PriceUP AND MACDUp;BearishDiv = PriceUP AND NOT MACDUp;Filter = BullishDiv OR BearishDiv;AddColumn( BullishDiv, "Bullish Divergence", 1.0,
       colorDefault, IIf(BullishDiv, colorGreen, colorDefault ) );
AddColumn( BearishDiv , "Bearish Divergence", 1.0,
       colorDefault, IIf(BearishDiv , colorRed, colorDefault) );



2. Using linear regression  

// 10 day linear regression slope of closePriceUp = LinRegSlope( C, 10 ) > 0 ; // 10 day linear regression slope of MACD histogramMacdUP = LinRegSlope( MACD() - Signal(), 10 ); 


The divergences can be applied to any oscillators for any specific values.