MACD is a trend-following momentum indicator and is known for signalling trend reversal in a traded security or index.
NEW DELHI: As the bears overpowered the bulls on Monday, dragging the Nifty pack down by some 60 points, momentum indicator moving average convergence divergence, or MACD, showed bearish crossovers on 98 counters on NSE, signalling the possibility of a downward trend reversal.
Among the stocks that saw bearish crossovers were Idea Cellular, Allahabad Bank, HPCL, BHEL, Motherson Sumi, Power Finance Corporation, SREI Infrastructure, PTC India, Wipro, Sintex Industries, Gujarat Pipavav Port and Aditya Birla Capital.
Some of these counters have been witnessing strong trading volumes, adding further credibility to the emerging trend.
Other stocks that saw similar bearish crossovers included UCO Bank, Arcotech, Hero MotoCorp, Majesco L, Amara Raja Batteries, Zee Media Corp, Maruti Suzuki India, Welspun India, Tejas Networks, IL&FS Transportation and Nava Bharat Ventures.
MACD is a trend-following momentum indicator and is known for signalling trend reversal in a traded security or index. It is the difference between the 26-day and 12-day exponential moving averages. A nine-day exponential moving average, called the signal line, is plotted on top of the MACD to reflect ‘buy’ or ‘sell’ opportunities.
When the MACD crosses above the signal line, it gives a bullish signal on the charts, indicating that the price of the security may see an upward movement, and vice versa.
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The MACD alone may not be sufficient signal to help take an investment call. Traders should make use of other indicators such as Relative Strength Index (RSI), Bollinger Bands, Fibonacci Series, candlestick patterns and Stochastic to confirm an emerging trend.
Retail investors should consult financial experts before buying or selling a stock based on such technical indicators.
The MACD charts also signalled bullish crossovers for 29 stocks on NSE, indicating ‘buy’ signals. They included Tata Power, PNB Housing Finance, HDFC Bank, KEC International, UltraTech Cement, MAS Financial Services, Filatex India, Shalby and TRF.
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The Nifty50 index on Monday formed a bearish candle similar to the ‘Bearish Harami’ pattern on the daily chart. A ‘Bearish Harami’ followed by a ‘Bullish Harami’ pattern indicates that the bulls and the bears are not ready to loosen their grips and followup action was missing on both sides, said Chandan Taparia of Motilal Oswal Securities.
On the way up, the gap area between 10,834 and 10,850 levels will be a crucial resistance zone for Nifty in the near term, whereas on its way down, the 10,701 level will be a crucial support, said Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas.
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In the near term, the index can drift lower towards the 10,550 –10,417 zone once it breaks the low of 10,701. Overall, the short-term chart structure of the index remains bearish.
“We maintain our bearish outlook on the index for the short term with a reversal placed at 10,930,” said Ratnaparkhi.
Take 10: How to use these tech pointers to spot market trend
1/11
If there is something that makes even the brightest scratch their head, it has to be this -- how to spot a market trend. It's an art, and science both.How to crack the code? Sweat not, help is at hand. We put together 10 such tools, and we bet you won't lose sleep.
If there is something that makes even the brightest scratch their head, it has to be this -- how to spot a market trend. It's an art, and science both.How to crack the code? Sweat not, help is at han..
Read More
Just remember 30 and 70. That will do you good while using RSI, a momentum indicator. It measures the speed and magnitude of directional price movements. Want to know overbought or oversold levels? RSI is the popular choice. But the catch is it has to be used along with other moving averages and indicators.
Just remember 30 and 70. That will do you good while using RSI, a momentum indicator. It measures the speed and magnitude of directional price movements. Want to know overbought or oversold levels? R..
Read More
Its USP: Easy to use. MACD can tell you the change in the short-term trend in the market. It shows the distance between two moving averages and can be plotted on any technical software without an effort. But remember, avoid using MACD in a dull and lacklustre market.
Its USP: Easy to use. MACD can tell you the change in the short-term trend in the market. It shows the distance between two moving averages and can be plotted on any technical software without an eff..
Read More
The ongoing trend, oversold levels and trend reversals -- in all this, Bollinger Bands won't let you down. The name takes off from technical trader John Bollinger. Bollinger Bands are plotted with 2 SD from a simple moving average. It comes in handy for derivative analysts, who use this indicator to play Vega or volume spread. You would do well if other indicators such as RSI, Stochastics or parallel channel lines are used in conjunction.
The ongoing trend, oversold levels and trend reversals -- in all this, Bollinger Bands won't let you down. The name takes off from technical trader John Bollinger. Bollinger Bands are plotted with 2 ..
Read More
You can find out strength in an ongoing trend, with ADX by your side. Which means it loses lustre when the market movement becomes narrow. Conversely, it gives solid result when price is trending up or down. Plus directional indicator (+DI) and minus directional indicator (-DI) should interest you here. What's more, ADX can show momentum divergence.
You can find out strength in an ongoing trend, with ADX by your side. Which means it loses lustre when the market movement becomes narrow. Conversely, it gives solid result when price is trending up ..
Read More
Sounds like a household name? With this, you get to know which way the market is about to move and potential reversals. Keep in mind Aroon-Up and Aroon-Down, and Aroon Oscillator is the difference between the two. The maths is simple: Aroon Up shows a crossover. Aroon Down signals a new trend. This helps you quantify the current trend using complex calculations. Aroon measures time elapsed since new high or low for a given window.
Sounds like a household name? With this, you get to know which way the market is about to move and potential reversals. Keep in mind Aroon-Up and Aroon-Down, and Aroon Oscillator is the difference be..
Read More
It's an old hand, may we say -- the tool has been in use for over 50 years! That speaks for itself. This momentum indicator gives traders insights about overbought and oversold conditions of a security. There are two lines to take note of -- %K and %D lines. Fast stochastic is more volatile and would trigger most signals.
It's an old hand, may we say -- the tool has been in use for over 50 years! That speaks for itself. This momentum indicator gives traders insights about overbought and oversold conditions of a securi..
Read More
Short for Average True Range, ATR works much better during a range-bound market and not in a trending one. Linked to 14-period intervals, ATR and can be calculated daily, weekly, or by the hour. Introduced by Welles Wilder, the barometer gives better results when used along with RSI or MACD.
Short for Average True Range, ATR works much better during a range-bound market and not in a trending one. Linked to 14-period intervals, ATR and can be calculated daily, weekly, or by the hour. Intr..
Read More
When it comes to managing risks, Fibonacci is second to none. The flip side is, it may not be that accurate when the movement is sideways. Fibonacci Retracements of 61.8 per cent and 38.2 per cent are hugely popular. The levels closely correspond to the Elliot wave theory. Moving average coupled with Fibonacci stand you in good stead.
When it comes to managing risks, Fibonacci is second to none. The flip side is, it may not be that accurate when the movement is sideways. Fibonacci Retracements of 61.8 per cent and 38.2 per cent ar..
Read More
The indicator is user-friendly, just like MACD. You can be assured of an accurate reading about the current trend. Super Trend makes use of two key data points, namely 'Period' and 'Multiplier’.The best part is it can be used on equities, futures or forex and works well with trending markets, apart from volume-based pointers.
The indicator is user-friendly, just like MACD. You can be assured of an accurate reading about the current trend. Super Trend makes use of two key data points, namely 'Period' and 'Multiplier’.The b..
A close look at the chart of Maruti Suzuki India shows whenever the MACD line has crossed above the signal line, the stock has always shown an upward momentum and vice versa.
Shares of the company closed 1.10 per cent lower at Rs 8792.10 on June 26.
Take 10: How to use these tech pointers to spot market trend
1/11
If there is something that makes even the brightest scratch their head, it has to be this -- how to spot a market trend. It's an art, and science both.How to crack the code? Sweat not, help is at hand. We put together 10 such tools, and we bet you won't lose sleep.
If there is something that makes even the brightest scratch their head, it has to be this -- how to spot a market trend. It's an art, and science both.How to crack the code? Sweat not, help is at han..
Read More
Just remember 30 and 70. That will do you good while using RSI, a momentum indicator. It measures the speed and magnitude of directional price movements. Want to know overbought or oversold levels? RSI is the popular choice. But the catch is it has to be used along with other moving averages and indicators.
Just remember 30 and 70. That will do you good while using RSI, a momentum indicator. It measures the speed and magnitude of directional price movements. Want to know overbought or oversold levels? R..
Read More
Its USP: Easy to use. MACD can tell you the change in the short-term trend in the market. It shows the distance between two moving averages and can be plotted on any technical software without an effort. But remember, avoid using MACD in a dull and lacklustre market.
Its USP: Easy to use. MACD can tell you the change in the short-term trend in the market. It shows the distance between two moving averages and can be plotted on any technical software without an eff..
Read More
The ongoing trend, oversold levels and trend reversals -- in all this, Bollinger Bands won't let you down. The name takes off from technical trader John Bollinger. Bollinger Bands are plotted with 2 SD from a simple moving average. It comes in handy for derivative analysts, who use this indicator to play Vega or volume spread. You would do well if other indicators such as RSI, Stochastics or parallel channel lines are used in conjunction.
The ongoing trend, oversold levels and trend reversals -- in all this, Bollinger Bands won't let you down. The name takes off from technical trader John Bollinger. Bollinger Bands are plotted with 2 ..
Read More
You can find out strength in an ongoing trend, with ADX by your side. Which means it loses lustre when the market movement becomes narrow. Conversely, it gives solid result when price is trending up or down. Plus directional indicator (+DI) and minus directional indicator (-DI) should interest you here. What's more, ADX can show momentum divergence.
You can find out strength in an ongoing trend, with ADX by your side. Which means it loses lustre when the market movement becomes narrow. Conversely, it gives solid result when price is trending up ..
Read More
Sounds like a household name? With this, you get to know which way the market is about to move and potential reversals. Keep in mind Aroon-Up and Aroon-Down, and Aroon Oscillator is the difference between the two. The maths is simple: Aroon Up shows a crossover. Aroon Down signals a new trend. This helps you quantify the current trend using complex calculations. Aroon measures time elapsed since new high or low for a given window.
Sounds like a household name? With this, you get to know which way the market is about to move and potential reversals. Keep in mind Aroon-Up and Aroon-Down, and Aroon Oscillator is the difference be..
Read More
It's an old hand, may we say -- the tool has been in use for over 50 years! That speaks for itself. This momentum indicator gives traders insights about overbought and oversold conditions of a security. There are two lines to take note of -- %K and %D lines. Fast stochastic is more volatile and would trigger most signals.
It's an old hand, may we say -- the tool has been in use for over 50 years! That speaks for itself. This momentum indicator gives traders insights about overbought and oversold conditions of a securi..
Read More
Short for Average True Range, ATR works much better during a range-bound market and not in a trending one. Linked to 14-period intervals, ATR and can be calculated daily, weekly, or by the hour. Introduced by Welles Wilder, the barometer gives better results when used along with RSI or MACD.
Short for Average True Range, ATR works much better during a range-bound market and not in a trending one. Linked to 14-period intervals, ATR and can be calculated daily, weekly, or by the hour. Intr..
Read More
When it comes to managing risks, Fibonacci is second to none. The flip side is, it may not be that accurate when the movement is sideways. Fibonacci Retracements of 61.8 per cent and 38.2 per cent are hugely popular. The levels closely correspond to the Elliot wave theory. Moving average coupled with Fibonacci stand you in good stead.
When it comes to managing risks, Fibonacci is second to none. The flip side is, it may not be that accurate when the movement is sideways. Fibonacci Retracements of 61.8 per cent and 38.2 per cent ar..
Read More
The indicator is user-friendly, just like MACD. You can be assured of an accurate reading about the current trend. Super Trend makes use of two key data points, namely 'Period' and 'Multiplier’.The best part is it can be used on equities, futures or forex and works well with trending markets, apart from volume-based pointers.
The indicator is user-friendly, just like MACD. You can be assured of an accurate reading about the current trend. Super Trend makes use of two key data points, namely 'Period' and 'Multiplier’.The b..
