![HERE THROUGH SOME DSE CHARTS I WILL TRY TO INDICATE THE EFFECTS OF VARIOUS MOVING AVERAGES ON THE GENERAL INDEX ,[object Object],First let us see what these moving average means DEFINITIONS 1. A simple moving average (SMA) is the unweighted mean of the previous n data points. For example, a 10-day simple moving average of closing price is the mean of the previous 10 days' closing prices. ** Remember >> moving average levels are interpreted as support in a rising market, or resistance in a falling market](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
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Index
- 1. UNDERSTANDING THE MOVING AVERAGE EFFECTS ON INDEX
- 3. This was the story of June ….
- 4. THESE ARE FEW MOVING AVERAGE LINES ………..
- 7. FIRST TIME IN MANY WEEKS, THE RED CANDLE’S LEG TOUCHED THE 8 DAYS EMA, ON 5 TH OF JULY AND THE TROUBLE BEGAN NOTICE HOW THE WMA BENT TO ABSORB THE INDEX WEIGHT, IT LOOKS SOOO HEAVY …… CAN IT ABSORB THE WEIGHT ???
- 8. BUT THE NEXT DAY, wma gave up, INDEX PENETRATED AND FALL BELOW WMA 8 THAT WAS AN OMNI0US SIGN FOR THE TA
- 9. ON THE THIRD DAY, INDEX RAPTURED 15 DAYS AVG LINE, PUSHING ACROSS 8 DAYS WMA ALSO FAILED
- 10. NOTICE THE DIVERGENCE OF THREE AVG LINES. COULD HAVE BEEN A STRONG SUPPORT. BUT THE INDEX PENETRATED 12 DAYS WMA ON THE NEXT DAY ( 9/7)
- 11. NOTICE THE CONVERGANCE OF 15 DAYS MOVING AND 12 DAYS WMA. INDEX GOT SUPPORT HERE
- 12. THAT WAS JUST WOW ! AS THE MOVING AND WMA BOUNCED THE INDEX UP ABOVE EVEN THE 8 DAYS WMA ! IT WAS A GOOD SIGN FOR THE TA’S Something unexplainable happened on 12 July. Good volume with a bounce should been enough for trending up
- 13. July the 13 th : index became too heavy, penetrated 8 days wma, but look at the wma 12 and 15 days moving average : how they tried to stop further fall.
- 14. Though the TAs kept their finger crossed, index became super heavy and it not only penetrated the first three lines, it also penetrated the strong 15 days WMA line ( red)
- 15. SO THE INEVITABLE HAPPENED. LOOK AT THE FREE FALL !!
- 16. MOVING AVG 35 CAME INTO RESCUE, BUT IT WAS RAPTURED DUE TO THE FREE FALL MOMENTUM
- 17. ONE MORE FREE FALL. BUT NOTICE THE CONVERGANCE OF THE LOWER TWO LINES ( 50 WMA AND 50 MA), APPARENTLY WOULD TRY TO STOP FURTHER FALL. LETS SEE WHAT HAPPNENS NEXT
- 18. 1. 21 JULY : 50 DAYS WMA AND MA PROVIDES STRONG SUPPORT 2. 22 JULY :IT IS BOUNCED UP. BUT NOW THE PREVIOUS FRIEND, 8 DAYS WMA HOLDS ITS UPMOVE; THIN RESISTANCE
- 19. INDEX MANAGES TO CROSS 8 DAYS WMA, BUT AGAIN GETS CAUGHT BY 35 DAYS MA
- 20. 26 JULY : UNFORTUNATE, FRIENDS BECOME FOE. LOOK AT THE TWO MA CONVERGING WITH A VOW TO PUSH INDEX DOWN. A STRONG RESISTANCE AHEAD AS PER TA ! LETS SEE ..
- 21. 27 JULY: HEAVY DOWNWARD PRESSURE: INDEX PENETRATED 50 DAYS WMA AND 50 DAYS MA !
- 22. LOOK AT THIS GAP. WILL THERE BE A FREE FALL AGAIN ??
- 23. HOPE : I AM DRAWING A HORIZONTAL LINE ALONG THE LAST TWO LOWEST POINT. LET US EXTEND IT TILL ONE MORE YEAR IN THE PAST
- 24. THIS IS A COMPACT CHART SHOWING TILL 2007 NOTICE THESE THREE POINTS. ALSO NOTICE THE INDEX (2800)AS WELL
- 25. ZOOMED NOW NOTICE AGAIN : INDEX CROSSED/ TOUCHED BELOW 2800
- 26. SO WHAT DO YOU THINK ? WHAT CAN BE THE LIKELY TREND OF THE INDEX ? WHICH CONDITION SHOULD BE FULFILLED FOR A RISE TILL 3000 ? YOU MAY READ MY YESTERDAYS POST ON INDEX AND VOLUME ANALYSIS IF YOU LIKE TO KNOW MORE ABOUT VOLUME, WMA AND INDEX MOVEMENT