Reading relative strength on a chart (Hindi video)

Hindi · 10:26 · Published 2023-09-28 · From Techno Charts, the founder’s YouTube channel · On YouTube as “Best Tradingview Indicator for Swing Trading | Relative Strength”

How to read a relative strength indicator on TradingView: choosing the benchmark, the 65-day and 52-week settings, the zero line, and combining it with stage analysis.

Reading relative strength on a chart

The video is in Hindi. The method, in English:

Outperformance is relative. Relative strength compares a stock’s return with a benchmark over the same period. If a stock gains 30% in three months while the Nifty gains 10%, it is outperforming. It can also outperform while falling: if the Nifty drops 5% and the stock drops only 1%, the stock is still stronger than the market.

Pick the right benchmark. The Nifty is the default. For a small-cap stock, a small-cap index is a fairer comparison; for a bank, the Bank Nifty. Whatever you choose, use the same benchmark throughout an analysis.

Two periods, two timeframes. On TradingView, a relative strength indicator (several free ones exist, and they work alike) is set to:

Set the source to the close and the comparison symbol to your benchmark. The indicator oscillates around a zero line: above zero (green) the stock has beaten the benchmark over the period; below zero (red) it has lagged.

How to use it. For short-term trades, look for stocks whose daily relative strength is above zero; for longer holds, the weekly reading should be above zero. The signal is strongest when combined with stage analysis: a stock breaking out of a Stage 1 base into Stage 2 while its relative strength turns positive, and with volume rising on up days and falling on down days, is showing both a trend change and new leadership. That combination tends to catch the start of a move rather than trying to buy the exact bottom.

Doing this in Market Strength. Every stock chart has an RS line vs Nifty 500, rebased to 100: a rising line is the same story as an indicator above zero. The screener’s vs Nifty 500 3M column is the three-month version of the 65-day reading, and the Strong in a weak market screen lists stocks that beat the index by at least 10 points over three months. For stages, use the Stage analysis and Just entered Stage 2 screens. The scanner’s RS rating (above) is a ranking against all stocks, not against one index, so the two readings complement each other.

Read the guide: Relative strength scanner for NSE stocks

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