Oct 192010

Many a times I have noted, big names, big firms botch Technical Analysis in their basics. When it happens, I usually mutter a few words to myself and just let them pass. But this time around, I've not been able let it pass.

Here is a chart from the technical analysis desk of a leading firm that has concluded that this is a trendline breakout:

If you notice the peak of the "trendline" starts from a point of comfort not the actual peak. And the middle of trendline is the only point where this "trendline" meets a peak of a swing of this "descending trendline". And there is no third point at all!!!!! Basic maths tells us that if you connect 2 points you can draw a line. In the past, I've seen many lines being called a trendline but this time around with just one point!!! Now, that is really a first for me!! 🙂 🙂

  2 Responses to “What is not Technical Analysis”

  1. Sir, what do you recommend about IBReal in current scenario before expiry ? I am holding future lots of this stock.

  2. Rahul, this was meant to highlight, connecting random points does not make a trend line. They have also mentioned another bullish point based on Elliot Waves, that however seems to be right. So you do not have to panic 🙂 You know ur risk best, hold with appropriate stop loss. If I were holding futures I would use 190 on a daily closing level as the stop loss.

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