Chart reading: MACD shows these 84 stocks are set to rally
, ETMarkets.com|
Updated: Nov 21, 2017, 03.38 PM IST
NEW DELHI: Extending its gains for the third consecutive session, benchmark Nifty index of NSE closed near the 10,300 mark on Monday, even as momentum indicator moving average convergence divergence, or MACD, signalled upward crossovers for as many as 84 stocks on NSE.
The MACD is known for identifying trend reversals.
Among the stocks that saw bullish crossovers were HDFC Bank, Indiabulls Real Estate, TV18 Broadcast, YES Bank, Biocon, Snowman Logistics, Firstsource Solution, Nagarjuna Oil Refinery, Digjam, Edelweiss Financial Services and Welspun India.
Some of these counters have also been witnessing strong volumes, adding further credibility to the emerging trend.
Some other stocks that saw bullish crossovers included Kolte-Patil, Bajaj Finance, Future Retail, DCB Bank, McLeod Russel and Tribhovandas Bhimji Zaveri.
MACD is a trend-following momentum indicator, and is the difference between the 26-day and 12-day exponential moving averages. A nine-day exponential moving average, called the ‘signal line’, is plotted on top of the MACD to reflect ‘buy’ or ‘sell’ opportunities.
When the MACD crosses above the signal line, it gives a bullish signal on the charts, indicating that the price of the security may see an upward movement, and vice versa.
However, MACD alone may not be sufficient to help take an investment call.
Traders should make use of other indicators such as Relative Strength Index (RSI), Bollinger Bands, Fibonacci Series, candlestick patterns and Stochastic to confirm any trend.
Retail investors should consult a financial expert before buying or selling a stock based on such technical indicators.
Meanwhile, MACD charts also showed bearish crossovers for 21 stocks on NSE, which means a ‘sell’ signal. They included Bank of India, Graphite India, Tech Mahindra, Hexaware Tech, Tata Consultancy Services, Goa Carbons, CESC and VIP Industries.
The 50-share Nifty index of NSE settled 15.15 points, or 0.15 per cent, higher at 10,298 on Monday, while the BSE Sensex ended 17.10 points, or 0.05 per cent, up at 33,359.
The Nifty formed lower high and lower low on Monday compared with the previous session, indicating weakening trend.
Strength indicator RSI is trading below its reference line, which indicates that Nifty50 will face resistance on the higher side.
However, momentum oscillator stochastic turned positive from the oversold territory, signalling that the Nifty50 will get buying support at lower levels.
The Nifty50 managed to hold its bullish gap area between 10,233 and 10,267 levels, indicating strength on the near-term chart. Chart patterns indicate that if the Nifty50 manages to cross above the 10,310 level, then it can scale up towards 10,340 and 10,370 levels, while 10,260 and 10,220 levels are likely to act as supports on the downside.”
Understanding MACD
A close look at the chart of YES Bank shows whenever the MACD line crossed above the signal line, the stock has always shown an upward momentum and vice versa.
Shares of the lender closed 2.20 per cent higher at Rs 313.20 on November 20.
The MACD is known for identifying trend reversals.
Among the stocks that saw bullish crossovers were HDFC Bank, Indiabulls Real Estate, TV18 Broadcast, YES Bank, Biocon, Snowman Logistics, Firstsource Solution, Nagarjuna Oil Refinery, Digjam, Edelweiss Financial Services and Welspun India.
Some of these counters have also been witnessing strong volumes, adding further credibility to the emerging trend.
Some other stocks that saw bullish crossovers included Kolte-Patil, Bajaj Finance, Future Retail, DCB Bank, McLeod Russel and Tribhovandas Bhimji Zaveri.
MACD is a trend-following momentum indicator, and is the difference between the 26-day and 12-day exponential moving averages. A nine-day exponential moving average, called the ‘signal line’, is plotted on top of the MACD to reflect ‘buy’ or ‘sell’ opportunities.
When the MACD crosses above the signal line, it gives a bullish signal on the charts, indicating that the price of the security may see an upward movement, and vice versa.
However, MACD alone may not be sufficient to help take an investment call.
Traders should make use of other indicators such as Relative Strength Index (RSI), Bollinger Bands, Fibonacci Series, candlestick patterns and Stochastic to confirm any trend.
Retail investors should consult a financial expert before buying or selling a stock based on such technical indicators.
Meanwhile, MACD charts also showed bearish crossovers for 21 stocks on NSE, which means a ‘sell’ signal. They included Bank of India, Graphite India, Tech Mahindra, Hexaware Tech, Tata Consultancy Services, Goa Carbons, CESC and VIP Industries.
The 50-share Nifty index of NSE settled 15.15 points, or 0.15 per cent, higher at 10,298 on Monday, while the BSE Sensex ended 17.10 points, or 0.05 per cent, up at 33,359.
The Nifty formed lower high and lower low on Monday compared with the previous session, indicating weakening trend.
Strength indicator RSI is trading below its reference line, which indicates that Nifty50 will face resistance on the higher side.
However, momentum oscillator stochastic turned positive from the oversold territory, signalling that the Nifty50 will get buying support at lower levels.
The Nifty50 managed to hold its bullish gap area between 10,233 and 10,267 levels, indicating strength on the near-term chart. Chart patterns indicate that if the Nifty50 manages to cross above the 10,310 level, then it can scale up towards 10,340 and 10,370 levels, while 10,260 and 10,220 levels are likely to act as supports on the downside.”
Understanding MACD
A close look at the chart of YES Bank shows whenever the MACD line crossed above the signal line, the stock has always shown an upward momentum and vice versa.
Shares of the lender closed 2.20 per cent higher at Rs 313.20 on November 20.
