How to Spot Crash By RP
NIFTY500 or CNX500 index consists of Top 500 companies which represent 96% of total free-float market Capitalization of shares on NSE.
Market Direction is better caught by tracking this index than Nifty50.
Details about spotting falls are added to the weekly chart of Nifty500. This analysis also works on other indices and other lower timeframes as well.
Following are common things one can spot on the weekly chart which happen before the fall/crash of 2008 and 2020, similar things can be found in other indices and on all time frames in the chart.
1. Price will continue to make higher high RSI or MACD indicators will show trend exhaustion with lower high not breaking previous high
2. Series of Negative divergence is seen on the chart, look for 3 or more ( RSI is leading indicator that will produce more divergences compared to MACD )
3. Look for Head and Shoulders or Rising wedge or double top pattern on the chart at top of the trend
4. Finally Divergence line is broken out upside signalling the final move started, that's exit signal 1.
5. Rsi will break the line again downside and MACD cross below the signal line, that's exit signal 2.
DISCLAIMER: There is no guarantee of profits nor exceptions from losses. The technical analysis provided on the chart is solely the personal views of my research. You are advised to rely on your own judgments while taking any investing/trading decisions. Past performance is not an indicator of future returns. Investment/trading is subject to market risks. Seek the help of your financial advisors before investing/trading. Not recommended to take FnO positions based on this analysis