Technical Analysis for Beginners

[tvrssvk]

Home work for the learners

Experiment with different settings and consider adding this indicator to your trading arsenal.


Dude I like this part.

A Whole new concept in traderji I guess.

Great going! :thumb:

 

[veluri1967]

Sorry for the delay

Keltner Channels​

Keltner channels all fall into the general category of envelopes, which consist of three lines a middle line and two outer lines. Envelope theory holds that price has the greatest probability of falling within the boundaries of the envelope. Stock market price falling outside the envelope boundaries is considered an anomaly and therefore provides a trading opportunity.

History

Keltner Channels were developed by Chester W. Keltner. They were first introduced in the book "How To Make Money in Commodities", by Chester W. Keltner and are explained in the book "The New Commodity Trading System and Methods" by Perry Kaufman.

The Keltner Channel is based on the Average True Range and is sensitive to volatility.
It may be used in place of standard deviation (Bollinger) bands or percentage envelopes.

Originally, Keltner had his system buy when the close exceed the upper channel and sell when the close was below the lower channel. Basically, penetration exceeding the channels showed a strong bullish or bearish momentum and presumably the momentum would continue.

However, there is no reason why not to use Keltner Channels the same way as other price envelopes such as Bollinger Bands. When using Bollinger Bands ninety five percent of price movement occurs within the bands. The upper and lower bands are considered as extremes of the price movement and are a warning that price exhaustion may be occurring. Buy signals occur when the price is below the lower band and sell signal occur when price exceeds the upper band.

Calculation of Keltner Channels

Construction of Keltner Channels is simple so it is omitted here.



Why the 9 simple moving average you may ask?

Because that moving average have been working for us and many others.

Rest assured there is nothing supernatural about the number, other combinations of numbers might work just as well, the trick is in learning how to use Keltner Channels at one setting and to stick with it until it eventually proves to work or not to.

Keltner Channels work great in any time frame, the more trending the market, the better chance for success using the Keltner Channel.
Trading Set

On a daily chart with the Keltner Channel set at 9. We are looking for price breakouts outside the channel with the candle not only outside or touching the line but having also closed outside the upper line of the Keltner Channel.

We will add a filter to identify our trades as usual and in this case we like to use the Commodity Channel Index (CCI) set at 14.

Trading rules (Going Long)

Have your chart set up with the CCI indicator at 14 and Keltner Channel setting at 9.

Enter long whenever price closes outside the upper line of the Keltner Channel TOGETHER with the CCI crossing into overbought.

Your stop loss/exit will be the first candle closing below the lower Keltner Channel line.

For a target you could employ a 30 pip trailing stop or use Fibonacci expansions.

Fibonacci lesson some other time.

Worth Remembering

As with all trend following systems, the Keltner Channel works well in up trends or down trends, but doesn't work well in a sideways channel. As a trend following system it is not meant to catch tops or bottoms and should be used in combination with other indicators, such as RSI or MACD, to provide confirmation of the strength of a market.

For example charts and study, click the link below :-
http://www.traderji.com/technical-a...echnical-analysis-beginners-2.html#post363154


Happy learning
veluri1967:thumb::rofl:

 

[vishalalluri]

Sorry for the delay

Keltner Channels​

Keltner channels all fall into the general category of envelopes, which consist of three lines a middle line and two outer lines. Envelope theory holds that price has the greatest probability of falling within the boundaries of the envelope. Stock market price falling outside the envelope boundaries is considered an anomaly and therefore provides a trading opportunity.

History

Keltner Channels were developed by Chester W. Keltner. They were first introduced in the book "How To Make Money in Commodities", by Chester W. Keltner and are explained in the book "The New Commodity Trading System and Methods" by Perry Kaufman.

The Keltner Channel is based on the Average True Range and is sensitive to volatility.
It may be used in place of standard deviation (Bollinger) bands or percentage envelopes.

Originally, Keltner had his system buy when the close exceed the upper channel and sell when the close was below the lower channel. Basically, penetration exceeding the channels showed a strong bullish or bearish momentum and presumably the momentum would continue.

However, there is no reason why not to use Keltner Channels the same way as other price envelopes such as Bollinger Bands. When using Bollinger Bands ninety five percent of price movement occurs within the bands. The upper and lower bands are considered as extremes of the price movement and are a warning that price exhaustion may be occurring. Buy signals occur when the price is below the lower band and sell signal occur when price exceeds the upper band.

Calculation of Keltner Channels

Construction of Keltner Channels is simple so it is omitted here.



Why the 9 simple moving average you may ask?

Because that moving average have been working for us and many others.

Rest assured there is nothing supernatural about the number, other combinations of numbers might work just as well, the trick is in learning how to use Keltner Channels at one setting and to stick with it until it eventually proves to work or not to.

Keltner Channels work great in any time frame, the more trending the market, the better chance for success using the Keltner Channel.
Trading Set

On a daily chart with the Keltner Channel set at 9. We are looking for price breakouts outside the channel with the candle not only outside or touching the line but having also closed outside the upper line of the Keltner Channel.

We will add a filter to identify our trades as usual and in this case we like to use the Commodity Channel Index (CCI) set at 14.

Trading rules (Going Long)

Have your chart set up with the CCI indicator at 14 and Keltner Channel setting at 9.

Enter long whenever price closes outside the upper line of the Keltner Channel TOGETHER with the CCI crossing into overbought.

Your stop loss/exit will be the first candle closing below the lower Keltner Channel line.

For a target you could employ a 30 pip trailing stop or use Fibonacci expansions.

Fibonacci lesson some other time.

Worth Remembering

As with all trend following systems, the Keltner Channel works well in up trends or down trends, but doesn't work well in a sideways channel. As a trend following system it is not meant to catch tops or bottoms and should be used in combination with other indicators, such as RSI or MACD, to provide confirmation of the strength of a market.


Happy learning
veluri1967:thumb::rofl:

VELURI COULD U ACTUALLY PLEASE MAKE IT EASIER TO UNDERSTAND

MY FRANK OPINION AND REQUEST

I WANA KNOW ABOUT KELTNER CHANNEL TOO BUT WHAT U POSTED LOOKS COMPLICATED TO ME

HOPE U DONT MIND IT WOULD BE EASIER IF U GIVE COUPLE OF LINES FIRST SAYING ABOUT WHAT KETLER CHANNEL IS ALL ABOUT IN A SIMPLE MANNER

:cheers:

 

[sachinhanswal]

veluri sir.......

thank you for the concerned........can u tell me any good author for book as u suggested.......becoz I really don't know which author has expalin in better way.........kindly recommend if u can..........

 

[atul.malwade]

I am using pivot point theory for intraday but i want the formula for intraday profit of Rs.5 to 7 with stop loss if any formula pls give me

 

[veluri1967]

VELURI COULD U ACTUALLY PLEASE MAKE IT EASIER TO UNDERSTAND

MY FRANK OPINION AND REQUEST

I WANA KNOW ABOUT KELTNER CHANNEL TOO BUT WHAT U POSTED LOOKS COMPLICATED TO ME

HOPE U DONT MIND IT WOULD BE EASIER IF U GIVE COUPLE OF LINES FIRST SAYING ABOUT WHAT KETLER CHANNEL IS ALL ABOUT IN A SIMPLE MANNER

:cheers:

vishal,
please revisit the post, hope u will find the required info as i have edited the post.
thanks for the suggestion which i will keep in mind in featuring new posts.

Happy learning
veluri1967

 

[vishalalluri]

thnks veluri i saw the chart already i will work on ketler too

but i dun think i saw them in chart nexus please put some more charts of any scrips

thts a nice chart the one u put and great buy/sell signals

is this an intraday chart what u posted

if such a signal is given on intraday it wud be coool :

 

[veluri1967]

How to profit in intraday quickly about Rs.5 to Rs.10 buck. This is the mute question many of my new friends have asked me to answer. I have been searching for a answer trying different settings, strategies and indicators.

At last, I have concluded that its possible only when you foresee a change in trend. There are various methods to forecast a change in trend example by divergence in indicators with that of price.

We all know that Volume is the key factor to determine the price patterns.

Hence here is my next post on Chaikin Oscillator based on volume:-

Chaikin Oscillator

The Chaikin Oscillator or Volume Accumulation Oscillator consists of the difference between two exponential moving averages (usually 3 and 10-day) of the Accumulation Distribution Line indicator and is used to confirm price movement or divergences in price movement. The Chaikin Oscillator is more accurate than the On Balance Volume indicator.

Chaikin Oscillator: factors in the closing price in relation to the highs, lows, and average price and determines the appropriate ratio of volume to be attributed to the day.

The main purpose of the Chaikin Oscillator is to confirm price trends and warn of impending price reversals. The chart below illustrates this phenomena"-


High #1 to High #2
Scrip made higher highs, usually a bullish sign. However, the Chaikin Oscillator failed to mirror the scrips advance higher and ended up making a lower low. This bearish divergence forewarned of the impending price reversal.

High #2 to High #3
It made a significantly lower high. The Chaikin Oscillator confirmed the scrips downtrend by making a lower high as well.

Low #1 to Low #2
it made significant lower lows, yet the Chaikin Oscillator made higher lows. This bullish divergence signaled that the previous downtrend may have ended.

The Chaikin Oscillator is a helpful volume based technical indicator that helps confirm the current price action or foreshadow future price reversals. Other technical indicators similar to the Chaikin Oscillator is the On Balance Volume indicator and the Money Flow Index.

I will post the charts for better understanding of the concept, if you are interested in the concept.

Veluri1967

 

[Rakesh_nasa84]

Before understanding Bollinger Bands, a knowledge about moving averages is of paramount importance.

Definition, explanation and basics of moving averages is deliberately ommitted as the same can be learned by browsing any technical indicators site.

Think differently and BE A WINNER. Make exploration of basics by practising and observing.

So, friends, here is the next post.

A Different Type of Moving Average Cross ​

Virtually every trader has dabbled with or experimented with some sort of moving average. What I want to introduce you to in this lesson is a different sort of moving average cross method, which I have found to be very good at identifying short term trend changes.


As we know a moving average is normally plotted using the close of a bar e.g. if you were plotting a 3 period moving average, then you would add the last three closes and divide the total by three to get a simple moving average.

This is where I want you to think a little differently.

I have always been an advocate of taking traditional thinking and changing it around.

What if you used the open instead of the close? What if you used the close of one period of a moving average and the open of another?

First, most charting packages will allow you to use the open, high, low or close to plot a moving average.

I use a 5 period exponential moving average of the close and a 6 period exponential moving average of the open on daily, hourly charts. My experience shows that it catches the short term trend changes really nicely.

Of course you will go through periods of consolidation with any market and any moving average method you use will be whipsawed. To get around this you need some sort of filter or approach that helps you keep out of the low probability trades.

You could use ADX, Stochastic or MACD to help filter the noise but I also like to add a time frame.

To help identify better entry points you can drop down a few time frames to the 30 minute chart.

There are lots of ways to trade this but a neat little trick is to wait for the signal on a higher time frame and then drop down a few time frames and wait for a pullback.

The first signal after the pullback on the lower time frame is normally a pretty good entry point e.g. If there were a cross up on the large time frame then drop down to a lower time frame and wait for the market to retrace and then give another buy signal (cross up). The opposite is true for short signals.

Once you get the signal on the shorter time frame depending on where support is you can usually place your first stop loss under the nearest support area (valley). If the market begins to make progress you can move your stop so that it trails the market by moving your stop to just under the most recent support area.


Here I used only an exponential moving average but as said earlier experiment with different types of average such as weighted, smoothed or simple. You can also experiment with different lengths of moving average.

Happy Experimenting & Learning

Thanks for sparing your valuable time to be with me.

veluri1967:thumb::rofl:

Hello Sir,

Very much thankful to you.

 

[veluri1967]

hi new friends,

Some of you are pressing me hard to post some charts explaining the concepts of Pivot Points, RSI, MACD, Moving Average Crossover.
I have here the charts of Cipla of intraday depicting all the four ie pivot points, RSI, MACD and Moving Average Crossover. Hope u all are ready with basic theoritical knowledge otherwise refresh by going back to the basics in this same thread.

The Charts are 1 minute and 3 minutes. We need to take decisions by comparing both charts.

As you can see, the price opened below Pivot Point hence its time to short.
Wait...for the action of price.
Can you notice that...the price climbed up to Pivot point to test penetration and failed and closed below pivot point. Hence, the first trading signal is given. SHORT.

Now the price started rolling down to Support1. We can notice that the price took support at Support1 and bounced back. (See 1 minute Chart).
Wait... donot we need to verify with other indicators to confirm the reversal.
RSI is making a new low at Circle 1 giving a signal for BUY. Bollinger Bands are also giving a BUy signal. Whereas the MACD is not confirming it except that it is looking up. Can we risk just taking cue from RSI, Support 1 reversal, Bollinger Bands. Yes...for hardcore traders. But for beginners, I suggest that just ignore this signal, since RSI and MACD are not favouring.
Wait....again at Circle 3 on MACD line, a bearish crossover is confirming our stand on SELL. Now... the time is to test Resistance 1. We can see.... there is no resistance forming at Support 1 (both in 3min and 1 min charts). Hence the downtrend continues sticking with our SELL.

Now the price approached Resistance 2 (which itself indicates OVERSOLD condition). Expect strong Support at Support 2 from slipping further.

Yes. It did find strong support at Resistance 2. Square off your position.

Now... Wait for price reversal.

Refer 3min chart. Can you see a bottoming out in RSI at Circle 1. Surely a buying opportunity. It is confirmed by Moving Average Crossover at Circle 3.
But what about MACD. Refer 1 min chart. Isnot MACD giving a BUY signal at Circle4. Go.....Go.....Go.....BUY. Yes....MACD is also now confirming BUY in 3min chart at Circle 2.

Here on....there is no looking back....the price penetrated Support1 with ease heading towards Pivot Point.

That's all folks.

Enjoyed it.

veluri1967.