TECHNICAL ANALYSIS AND KEY TERMS

  TECHNICAL ANALYSIS is a security analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume

What is DMA (Simple moving average) in stock market ?

Simple moving average or DMA :frequently used in technical analysis showing the average value of a security’s price over a set period. Moving averages are generally used to measure momentum and define areas of possible support and resistance.
Stocks trading above its 30,50,150 or 200 DMA are considered as those stocks that are above their resistance and are likely to go up, on the other hand Stocks trading below their 30,50,150 or 200 DMA considered as those stocks that are below their support levels and are likely to come down.
most important is 200 dma stocks trading below 200 dma  are considered in long time bear market and holding above 200 dma is considered in bull market 
NOTE: This is not only a single factor that should be taken into account while purchasing or selling a stock, it largely depends on the market conditions

BREAK OUT A breakout is when prices pass through and stay through an area of support or resistance. On the technical analysis chart a break out occurs when price of a stock or commodity exits an area pattern.

CHART PATTERN :
A Price pattern is a pattern that is formed within a chart when prices are graphed. In stock and commodity markets trading, chart pattern studies play a large role during technical analysis. When data is plotted there is usually a pattern which naturally occurs and repeats over a period. Chart patterns are used as either reversal or continuation signals.
Some people^[who?] claim that by recognizing chart patterns they are able to predict future stock prices and profit by this prediction; other people respond by quoting "past performance is no guarantee of future results" and argue that chart patterns are merely illusions created by people's subconscious. Certain theories of economics hold that if there were a way to predict future stock prices and profit by it then when enough people used these techniques they would become ineffective and cease to be profitable. On the other hand, predicting what others will predict the market will do, would be valuable information.

Resistance – a price level that may prompt a net increase of selling activity
Support – a price level that may prompt a net increase of buying activity

                    

NIFTY: Has market turned around?

                                                                               Nifty made a stunning move on Friday and  made some more pullback yesterday. Lucky traders would have made impressive gains. But the key question remains: Is this turnaround for real?. And yes, the move does warrant re look at market positioning.
Can one invest with confidence in the market?
I am afraid not. S&P500 continues to have bearish setup below 50 dma. Overnight S&P500 sold off from highs clearly indicating bearish pressure in the market. Nifty also has made a good pullback. BUT when you look at the charts of various stocks – they continue to be all over the place. They inspire no confidence.

At any point of time – these 3 questions are relevant:

1. What is the trend of the market. It means eventually where is market headed?
2. In ST – Is market going up and how much is the upside?
3. What is the probability of trading success?

 Let us look at Nifty Chart to answer the above question
As you can see in the chart above – It’s as chaotic as one can get. The Chart is all over the place. Nifty sold off from highs of 6200 it touched in May. AT Current price of 5842 – it is down 5.7% from highs. It is completely in line with what’s happening with Emerging markets. The Global trend for Emerging markets continue to be down and hence will play a big role in what Nifty does. That’s not all – even S&P500 is not looking great and can correct to 200 dma in next few days. Looking at the Global setup it’s very difficult to be BULLISH.
Emerging Markets ChartLast week, even Emerging markets staged a substantial comeback from lows but look at the overall picture and trend which unfortunately is very negative and bearish. What happened last week was just a PULLBACK.
That’s not all – the trend of Nifty is CHAOTIC right now. Though it has made a big pullback in last couple of days but technically that does not change the trend of the market. Nifty has made so many of these up and down moves that it is very difficult to make any sense out of it. We are in a difficult Global environment and India’s situation has not changed a bit both fundamentally and technically. The Gas price hike means nothing right now. How can a current Govt take a decision for next Govt?
IN Short term, Nifty can rally to 50 dma which stands at 5924 (5950: Horizontal resistance line). But looking at total Global picture and trend of the market: the picture is very confusing.
At this point of time – it’s safe to be neutral than BULLISH. There are too many ifs and buts and both bullish and bearish positions can get destroyed in no time.