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. 

Axis Bank Ltd

Axis Bank formed a strong negative MACD Div. on Daily the first tick of which was seen today.

Consequently there wad a negative HPI DIv formation and the HPI crossed the zero levels comfortably.

While the 240 M charts show a change towards negative trend the daily charts has simultaneously indicated the positive strength loosing steam.

Auro Pharma

Auro Phama is showing break in trend on daily with HPI crossing d zero levels.

On hourly however a positive MACD Div is forming , but the trend strength is negative.

ACC

ACC has turned negative on daily chart with the negative MACD Divergence working for it.

While the hourly has shown some amount of up move due to MACD positive div the trend is still negative in hourly.

While the HPI has comfortably crossed d crucial zero levels d stock may b headed down. — with Prachi Selvan and Archana Mankar.

Ranbaxy Ltd

The most crucial levels are indicators/oscillators crossing zero levels. This is not a sell signal but keep it on a watch list for a possible break out.

NIFTY

Crucial to watch Open Interest Levels to take positions accordingly. Watch out for possible divergence formations

R Com

Adani International