>Some Rules for Trading Reversals

There are a few preliminary points considered common to all reversal patterns that you should absolutely know before trying to pick a top or bottom in stock trading, which is difficult enough:

1. A prerequisite for any reversal pattern is the existence of a prior trend.
2. The first signal of a trend reversal is a break in an important trendline.
3 . The larger the pattern, the bigger the subsequent move.
4. Topping patterns are shorter in duration and more volatile than bottoms
5. Bottoms have smaller price ranges and take longer to build
6. Volume is more important on the upside

Existence of a Prior Trend - A prior major trend is the most important prerequisite for a reversal pattern. Of course, if there is not trend, there's nothing to reverse. One of the key elements in pattern recognition is knowing where certain patterns are most likely to show up in a trend structure, as in uptrend or downtrend.

Breaking of Important Trendlines - One of the first signs of trend reversal is the breaking of an important trendline. However, the violation of the trendline may be no more than just a signal of a change in trend. It could be a sideways trend or price pattern later proving to be a reversal or consolidation.

Larger the Pattern, Greater the Potential - Larger, in this case, refers to the height and width of the price pattern. Height measures the volatility, and the width measures the time taken to build and complete the pattern. The wider the price swings within the pattern (the measure of volatility) and the longer it takes to build, the more important the pattern and the greater the potential for the ensuing move.

Measuring techniques which measure the height of the pattern or vertical criteria are primarily applied to bar charts. Measuring the horizontal width of a a price pattern, used for point and figure charting, uses a device called a "count" which assumes a close relationship between the width of a top or bottom and the subsequent price target.

Differences Between Tops and Bottoms - There are distinctive differences between tops and bottoms. Tops are shorter in duration, more volatile, and their price swings are wider and more violent. Whereas, bottoms have smaller price ranges and take longer to build, making them easier and less costly to identify. It is also easier to trade bottoms than to catch tops. However, traders can usually make money a lot faster by catching the short side of a bear market because prices tend to decline faster than they go up. It is always a tradeoff between reward and risk. Greater risks capture greater rewards, and vice versa. Topping patterns may be harder to catch, but Day Trading, Swing Trading and Options Trading traders all agree that they are worth the effort.

Volume is More Important on the Upside - Volume is an important factor in confirming the completion of price patterns, and generally, it increases in the direction of market trend. Noticeable volume increases should accompany the completion of a price pattern. Note that in the early stages of trend reversal, volume is not as important at market tops. Although traders like to see an increase in trading activity as prices go down, it's not critical. However, at bottoms a volume pick up is vital. If there's no significant increase in volume during an upside breakout, the whole price pattern should be questioned.

>IFCI analysis

IFCI witnessing good buying and also holding its support well due to which it looks a bood buy in dips till 55 is maintained which can be taken as stoploss for longs,So if 55 is maintained ifci can target 72-75.
This corrective wave rally may reach max 80 I think ,Also there is a news about strategic stake buy in IFCI by joint bidding by RELIANCE IND & STAN CHART.Do not trade with out stoploss

regards
Rish

>Reliance

After making an high of 2674+ Reliance has been falling consistently and has lost more than 200 points in this fall things looks upbeat for this stock for couple of trading sessions at least so reliance should try to touch 2560-2550 in the coming days to complete corrective wave rally.

Ones who want to try a trade on this analysis can long reliance with a stop loss of more than a percent from present levels and hold it.

Risky players can even try immediate strike price or 2550(resistance)call option.

Regards
Rish

>Yahoo messenger virus

This is important for you if you are a trader and use yahoo messenger to get connected with fellow traders.
There is a new virus outburst which attacks yahoo messenger this virus spreads through pen drives due to which when ever we try to login yahoo messenger disappears and gives an error message application error if any body facing such trouble can contact me on rishtrader@gmail.com or can add me in yahoo messenger id:- rish.trader@yahoo.co.in.

I would be happy to help you to remove that virus an i myself went through that virus hunting.

Regards
Rish