A Falling Wedge in Sensex

We have seen market consolidating, these days. The cocktail of negative news have driven market near to 18000 levels. Before it reach 18000 we are seeing falling wedge pattern forming. 

A Falling Wedge

A Divergence Building up 

Simultaneously, we are seeing a Bullish Divergence forming in market. As we are seeing a gap filling have started up in Sensex. We may see a reversal @18000 level after filling up of gap; which will eventually lead to a bullish breakout in Falling wedge.

Important SAR

Ashok Leyland, a falling wedge

After witnessing Ashok making some lows, I smell some bullishness in this stock. It is recent; I have spotted a falling wedge formation along with a divergence forming. According to me, Ashok Leyland is going to make a new low then will get ready to shoot high.

We have recently seen MACD making a negative crossover and RSI giving a buy signal.

Conclusion:  wait till pattern complete, look for divergence.  

What did i really do,this year?

Hello friends I was bit busy after my exams. On dec 12^th I had completed a year into Stock Market. My personal experience can’t be described in world. I just loved what I did/doing.

A question always hit my mind “what you really learnt in this whole year?”

The answer is mind blowing; you can do anything and everything. You just need dedication; I have a basic rule led by the great Kabir in his Dhohas:

"करत करत अभ्यास के, जड़मति होत सुजान
रसरी आवत जात ते, सिल पर परत निसान"

There are 4 mode of learning and one of them is “Trial and Error Method”. Last whole year I had spent whole of my year I had spent in hunting for knowledge, a right one. In this year I had spent most of my time in confusion, quest and with a bunch of question etc etc

I some time feel, I had spent whole year just looking and learning. Did you know what I learnt? Ok let me be truthful, what your college or university teach is completely different what people do as there career and I have seen such people in market..

·          A person who complete GNIIT in Delhi and work as a successful Broker.

·         A person who complete his M.sc in Bio and work as on stock market analyst.

·         A horoscope reader who give his business a new dimension called “Stock market Astrologer”

·         A person who graduate in Arts and end as a Teacher of TA.

After seeing such people in market I was really inspired. If they can do, why can’t I do. This question dragged me into many sleepless nights at last I decided to enter into a world of “Demand and Supply” . This is a world where even an Expert gets cheated off. An university/ institute will just teach you what is what. I even don’t have that…

Since from my childhood I have a rule “No knowledge goes waste, grab it as much as you can”. I think this may be the reason why my friends call me “scientist”. Last 6 month back I need to decide my stream in college. I had 2 options:

• Finance
• Marketing

This was much difficult to judge. I even took the last minute to think before I let my name into specialized stream.

Finance(Stock market) is my interest and marketing is my talent(where I am good at). I have a deep understanding on Marketing and advertisement, I cant underestimate my talent. It was just 2/3 month that I had Started learning Technical Analysis.

Marketing/Finance din’t give me any difference. I was the only freak in the whole college who used to borrow books on “Investment Management, Option & future Trading etc” I still remember 1^st day in my marketing class where I was asked to leave class as they misunderstood me as a finance guy. I was so dedicated to what I was doing.

When my fellow friends come to know about this “They laugh at me, they insulted me and they criticised me”

Today, I don’t give any guarantee that, I will make my career in Stock Market. But Technical Analysis will be a integral part of my life. I have a deep desire to learn Economics and Fundamental Analysis. I hope I will complete it in next few years.

From 4^th dec I have started a new topic which is not at all related to Stock Market. It is on psychology, it may take another 6 months to complete it so I will give less concentration on TA and other aspects.

Last but not the least

“ you will never come to know the depth of water until and unless you jump into it”

Friends request:What Is a Stock Market Correction?

Anyone who watches the stock market knows it doesn't move up or down in a straight line. Some days it's up; other days it's down. If you look at the bigger picture, however, you'll see that the market moves in trends--that is, it moves predominantly in a single direction over time. Within that larger trend, there will be periods when the market moves in the direction opposite the prevailing trend. Such moves are called corrections.

1. Identification

   • A stock market correction is a temporary reversal in the major trend before the trend resumes. Though a market correction runs counter to the previously established trend, it doesn't represent the beginning of a new trend, at least so long as it remains a correction. A correction most often refers to a downward price movement after prolonged rallies, but it actually means a normalization of prices in either direction.

   Function

   • Stock market corrections occur when the investors and speculators driving a trend take profits. Most traders use comparison of risk and reward to evaluate the viability of any position. As a trend matures, risk begins to outweigh reward. Thus, a correction helps to tilt the balance back toward reward as prices return to more favorable entry levels.

   Significance

   • In most cases, an individual stock or a broader market will use a correction to return to a support or resistance level. This can be a trailing moving average or a previous price point that served as a top or a bottom within the trend. In practical terms, ownership of shares changes hands from short-term investors--who ride a trend--to long-term investors who make acquisitions. This process is called moving from weak hands to strong hands, and tends to quiet volatility. Because the stronger hands are less likely to part with their shares, the correction (if downward) tends to fuel another rally as speculators try to again purchase shares but find themselves having to pay more.

   Features

   • Corrections are also called retracements because they move back over the same price territory recently covered by the major trend. One strategy of technical analysis focuses specifically on the extent to which a correction retraces the previous trend in order to gauge its progress. A minor correction retraces a little more than one third of the previous trend, while a larger retracement might cover a little more than two thirds. Fifty percent retracements are not uncommon, and are widely used to distinguish between major and minor corrections. A retracement of about three-quarters of a previous move is a very deep correction, and any more than that begins to suggest that a new major trend might have begun.

   Time Frame

   • Corrections are also evaluated in terms of their time frame, using the same ratios as described above for retracements in price. Retracements that are shallow in price tend to last longer in duration. Conversely, those that are deep in price seem to happen faster. By this logic, a deep correction that lasts as long as the previous trend can start to be viewed as a new trend. Shallow corrections of a very short duration probably wouldn’t be considered a correction at all.