- Last week we had a small bounce in Suzlon energy from oversold levels.
- But one look at the daily line chart says the story, the stock is in a strong down trend. Trending down below the 200 day moving average.
- The line chart is also facing strong resistance in the form of a trend line. On closing basis the stock is not even able to cross above this trend line.
San,
ReplyDeleteI am a regular visitor of your Blog.
I congratulate you and thank you for your excellent charts and analysis.
I wish to seek a clarification about volumes.
Me and my trader friend have got misguided by huge volumes, for e.g. on 06/05/10, 15/06/10 and 13/07/10, Suzlon went up with huge volumes, but even then the stock went on declinining.Huge volumes are false indicators?
Kindly guide.
Thanks and Regards,
ttthakur
@tthakur
ReplyDeleteVolume spikes are largely due to news driven events. So in this case when there is an imbalance in supply and demand often it leads to reversal.
and i have never found a way to analyse volume spike as buying volume or selling volume during intraday.
So the best thing to do here is to see if a critical support or resistance levels is broken. In this case i don't think suzlon has broken a key resistance level.
When you combine a key break with volume may be you can get it right. In this case suzlon is in strong down trend, you have gone against the trend this is something which need great skill and mastery to manage.
Key points to note
1. Price action(key support or resistance)
2. Volume spike.
3. confirmation(price should remain above the breakout area)
Thank you