Price is the most significant indicator of any trend. It can determine the course without any assistance from volume or other technical indicators. Price can be analysed using several instruments.
Moving averages help in understanding the price trend; Bollinger Band defines the standard anticipated price deviation; Fibonacci Retracements helps in recognizing support and resistance levels; Candlestick patterns can help you preempt a bullish and bearish bias.
Volume plays a key role in visualising the interest of market participants. One can determine significance of a swing trade on the basis of the volume.
A robust surge in volume on a breakout clearly implies the possibility of a strong upside. Further, follow-up buying implies higher conviction thus increasing the possibility of achieving target and preventing losses.
And the last one is momentum oscillators. A rising stock may not necessarily always mean a firm upside. Hence, to gauge the outlook more precisely one needs to asses these select momentum oscillators.
The RSI helps in understanding the strength with overbought and oversold conditions as the extreme. Similarly, the MACD helps in identifying the direction, momentum and likely duration of the trend.
The simplest way to interpret a stock is to plot all these three indicators with standard parameters. The combination of these should provide a concise outlook on the stock. One may not be able to take a firm call, but should be able to identify the current movement.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.