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|A line parallel to the trend
line. It is drawn by drawing a parallel line through a point
farthest away from the trend line. In an uptrend, the
channel line is drawn through the lowest trough ; in a down
trend, through the highest peak. The channel line, or the
return line as it I sometimes called, had measuring
implications. Once a breakout occurs from an existing price
channel, prices usually travel a distance equal to the width
of the channel ( i.e., the distance between trend line and
Another term for technical analyst, because charts, whether handmade or computer
generated, are the primary working tool used for analysis.
|A gap that
usually occurs in very thinly traded markets or in the
middle of horizontal trading ranges. It is more a
symptom of a lack of interest than anything else.
Closing the Gap
|It refers to
pulling the prices back to the levels at which the gap
was formed. For example let us take a stock, which in
the way of its upward movement closed a week at Rs54
and in the week following it opened at Rs55.5 and
moved further to Rs68 without coming even at Rs56.
Here a gap of Rs1.5 is created. The gap will be
considered as closed when the price of stock comes
down to the rate at which the gap was created (Rs54).
Normally when stocks begin their journey from
consolidation phase, they move with a gap, which is
not easy to be filled.
|Complex Head and Shoulders
||An uncommon pattern
where two heads may appear. It has the same
forecasting implications as a regular head and
|A period of horizontal or
sideways price movements on the chart within a well
defined top and bottom. The main purpose of congestion
area analysis is to help the analyst determine in
advance the direction of the ultimate breakout.
|Any pattern that typically
signals the continuation of the trend in progress.
Markets after taking a breadth start their journey
A call option gives the owner the
right to buy a future at a specific price which is
called the Exercise Price or Strike Price.
A trader who sells the option has an unlimited
risk as the buyer of the option has an option to
exercise it. The owner of the option can exercise his
right on or before a predetermined date which is known
as Expiry Date, after this date the option lapses.
In case of call option, the option is treated as
in-the-money if market price is higher than strike
The option is treated as at-the-money if market price
is equal to exercise price.
The option is treated as out-of-money if market price
is less than the strike price.
if Niftys spot price is Rs. 2000 then call 1950
will be in-the-money, call 2000 will be at-the-money
and call 2050 would be called out of-the-money.
Circuit filter is applied to all the shares to
safeguard the interests of general investors from the
extreme volatilities in markets by preventing any
unexpected fall or rise in a single day beyond a
limit. If the limit is crossed by any of the shares in
a single trading day it is frozen for trade for some
time (cooling period).
It is a point on a stock chart where security price
and an indicator intersect each other. Crossovers are
used in aiding the forecast of future movements in the
price of a security. A crossover is a signal to either
buy or sell. Some of the indicators that may be used
for crossovers are "moving average" and
In a covered call, one should have delivery of the
stock for which one can write an option to earn the
premium against its delivery.