Thursday, October 15, 2009

In an uptrend, look to buy

In Trend Analyzer, a Technical Analysis software provided by http://www.technicaltrends.com/ ( I own the business), there is a tool to automatically draw waves. Sometimes, the software will not detect any waves and says so. Often, it will display a wave count that fits the latest price data. Now, auto generation of a complex structure is not possible since the waves theory has too many ifs and buts. More important, accuracy to fit the theory, is not needed.


I applied the Up wave tool to a 60 minute chart of tata Power, and this is what was projected.



What is the message? The instrument is in an uptrend. After an upmove it sees a pullback. (2 after 1, and now 4 after 3). Currently, it is in a pullback of some kind. The main trend which is UP is likely to resume soon.

What should the trader do? identify the point at which the trend becomes uncertain. This is the stop loss. Then decide to buy now, buy at a lower level, or buy on sign of strength. Take the trade, and let market forces decide the outcome.

The complexity of the wave counts is irrelevant here. The main trend was identified with the Wave tool, and trading tactics can then be applied. Listen to the message of the market.

5 comments:

prannyyyyyy said...

sir i am regular reader of your blog i just want to wish you a very happy and prosperous diwali

Sigamani said...

SudharanJi,

Wish you a happy n prosperous Diwali.

//Deiva

Ilango said...

Hi..Sudarshanji,

Wish you and your family a very happy Deepavali.

Best regards.

ilango

Krishna said...

Sir,
Wish you a happy and prosperous Diwali...!I had heard you saying that sugar stocks are ready to go much higher from current levels whereas previously you advised to be cautious as it seemed to be a bubble..any reason for change in outlook..

men said...

To all the visitors of this wonderful site, WISHIN YOU A HAPPY AND PROSPEROUS DIWALI, and to you Mr. Sudarshan, may you grow and all your dreams come true, we all like your analysis hope to see more of it in the coming year. Please give your picks for the coming year Thanks once again.