Hello!
From my archives(I am digging them for Sniper's benefit??!!) I found this question and answer which I thought mightbe appreciated. What is stated for bullishness may be applicable for Bearish scenario also.
I hope members may benefit from Tom's answers.
Sriram
---------- Forwarded message ---------- From: B.Sriram,BHS Management Services Pvt.Ltd <bhsppt@gmail.com> Date: Sat, Nov 3, 2007 at 9:52 AM Subject: What technical indicators would you recommend that would give a probable indication of what the market might do when it meets resistance or support levels, To: devanathan govindarajan < dev.rare@gmail.com> | Category: Advanced Elliott | | | What technical indicators would you recommend that would give a probable indication of what the market might do when it meets resistance or support levels, i.e. break them or bounce off them? Thank you. | | | | | Responder: Tom Denham | Date: 11/2/2007 | Wave analysis is more useful than other technical indicators for judging whether price is ready to exceed support or resistance levels. For example, if price is in wave 5 of an impulsive advance as it reaches resistance, there is a good chance that resistance will prove durable. However, if price is in wave 3 as it reaches resistance, there is a much better chance of resistance failing.
Having said that, I do monitor oscillators like Stochastics or RSI. Technicians generally consider oscillators a good choice in ranging markets to identify when price might turn. If price is rallying to resistance and an oscillator is already at the high end of its range, that would be a hint that resistance might hold. If price is near resistance and the oscillator is still in the middle of its range, that would suggest resistance might fail.
How do I combine wave analysis and indicators? Here are three examples:
(1) If an advance is at resistance in wave 3 and my oscillator is at the top of its range, I stay bullish but with a bit of caution.
(2) If an advance is at resistance in wave 5 and my oscillator is at the top of its range, I look for a corrective decline with high confidence.
(3) If an advance is at resistance in wave 5 and my oscillator is in the middle of its range, I wonder if the wave might extend from 5 waves into 9 as impulsive waves sometimes do. I would not add a position at this particular juncture, but I hold unless I see signs of deterioration.
(Every Mn., Wd. and Fri., Tom Denham brings you forecasts the FTSE, DAX, CAC, SMI, AEX, MIB 30, IBEX 35, Euro Stoxx 50 and Special Global Opportunities in his The European Short Term Update. Read it risk-free for 30 days.) |
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B. Sri Ram
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Yours Sincerely,
B. SriRam
Happy New Year 2010!!!
Director, Reliable Stocks and Shares(India)Ltd
4B,Skylark Apartments,
6,Rutland Gate FifthSt.,
CHENNAI- 600006.
Ph:044-42027089/42010221/28332373
Mobile: +919840063145
Note: Temporarily we have shifted to a New Office Premises at 303(Old:194) Poonamalle High Road Chennai.Ph: 42859151
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Sent from Chennai, TN, India
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