Tata Elxsi: Silent Runner

If you have been tracking the price chart of Tata Elxsi, you would have seen how it respects the technical support, resistance prices as well as patterns. For instance, around Jan-Feb’14, it made a high of around 425 and then respected it for some time. But once it broke above it, the first price it halted was a new life time high of around 660. From there, it went into a downward trending channel and corrected to an exact 38.2% retracement price of around 470. Recently it broke out of the same, which can be seen here:

As Keynes says, “We simply do not know”.. We can never have trade with 100% surety. Willing to take only 100% sure trades means calling for self-created trouble. But yes, the behavior of a stock in the past with reference to price and chart patterns can at least make us a sense of its flavour, and we can keep an eye on it. To me, Tata Elxsi seems one such stock, a silent runner!

The Three Laws Of Price Movement

Entry and exit points in market are one of the most important factors influencing our trading performance. Sometimes, traders should relax and muse over the theory governing price action. Here is a brief analysis of why price moves.

There are few basic factors which can define the price action and help to improve the enter and exit points. The laws of price action are:-

1. Price movement, in any free market, is a function of an ongoing supply and demand relationship within that market.

2. Any and all influences on price are reflected in price.

3. The origin of motion/change in price is an equation where one of two competing forces (buyers and sellers) becomes zero at a specific price.

A sharp increase or decrease in price can indicate easily either supply is more or demand. The price itself gathers all the information about what is going on within it. And a break out or breakdown from a narrow or range bound market could indicate an imbalance of supply and demand equation, hence a probable up or down is coming in near future. Using these basic parameters with your trading setup could improve your trading.