Thread by @FincademyIn

Thread: Trading the Channel:

1. Prices often moves in channel, channels may not be perfectly rectangle. Channels could be triangular channels, upward or downward rectangular channels.

#tradingthechannels

2. Identifying those channels will allow trader to (A) be on the right side of the market trend (B) Make good entry & exit.

3. For identification one should start with identifying long term major trending channels, on extrapolating those channels will be then useful in getting idea about future major resistance/support & possible breakdown/breakout points to be kept in mind.

4. The chart shared is of NIFTY50 Index on Weekly timeframe, you may see there are actually 2 major channels in place (1) Blue Lines major channel 1 (2) Black Line major channel 2.

5. Now you will see many small channels inside these major channels. You now have long term trend in place and also have an idea about the current channel on going or completing or starting.

6. Keep in mind that identifying channel will require at least 2-3 data points which on connecting will become channel. So initially you need to observe and once identified will allow you to take a trading call.

Identifying the current channel in Nifty

1. The current channel formation is small narrowing channel downward sloping. If you closely see downward sloping narrowing channel often indicates supply drying up and as a result such channel breaks out on upside.
#tradingthechannels

2. Now in trading you have to consider both possibilities with currently identified channel as I projected future lines based on major channel lines. This channel may break down in that case prices me test the major blue channel line.

3. On upside 9500 is acting as resistance which is the conjunction of 2 resistance line (Blank line & red line).

4. For now once can follow small red channel which is in action, and revisit again once that is violated.

Thread by @jackydhanwani

#nifty #technicalanalysis