Reading a rotation chart step by step (Hindi video)
Hindi · 14:34 · Published 2024-09-30 · From Techno Charts, the founder’s YouTube channel · On YouTube as “Breakout के पहले Sector Rotation कैसे identify करे | Understanding The Sector Rotation | RRG Chart”
- 0:00Introduction
- 3:45Momentum shifts in indices
- 6:31Identifying leading groups
- 11:47Selecting by relative trend
How to read a relative rotation graph (RRG) of NSE sector indices: the two axes, settings for swing and positional trades, and the clockwise quadrant cycle.
Reading a rotation chart step by step
The video is in Hindi. The method, in English:
Two questions per sector. A rotation chart places each sector index on two axes against a benchmark such as the Nifty 50 or Nifty 500. Left to right is relative strength: is the sector outperforming the benchmark? Bottom to top is momentum: is that relative strength improving or fading? If the IT index returns 15% in three months while the Nifty returns 10%, IT is outperforming; if it returns 10% against the Nifty’s 15%, it is underperforming. The same comparison works for any index or stock.
Match the settings to your holding period. For swing trading, use daily data and a short window (about one month); for positional trades, weekly data over six months to a year. The tail shows where each sector has been: a short tail (a few sessions) shows the latest shift, a long one (up to 30 weeks) the bigger cycle.
Follow the cycle, not the dot. Sectors tend to move clockwise: Leading, then Weakening (still outperforming, momentum fading), then Lagging (both fading), then Improving (momentum returning), and back to Leading. They do not always follow the order; a sector can jump from Lagging straight to Leading when outperformance and momentum both pick up at once.
- Look for sectors moving from Improving towards Leading: momentum is building and relative strength is turning up, so the odds of reaching the Leading quadrant are better.
- Avoid entering sectors moving from Leading down into Weakening: momentum is fading even though they still outperform.
- Then go one level down. Within a strengthening sector, look for the stocks with the best relative strength.
A rotation chart describes the past. It is built from historical prices, so it is a lagging tool: it shows where momentum has been, not where it will go. Use it to choose where to look, then confirm with the stocks’ own charts.
Doing this in Market Strength. The free live sector rotation chart and the scanner’s Sector Rotation tab place NSE sectors, industries and themes in the same four quadrants with recent tails, and you can open any group to see its strongest stocks. Its measures are simpler than a conventional RRG (see how it differs), so positions will not match other charts exactly, but the reading is the same: favour groups improving towards Leading.
Read the guide: Sector rotation scanner for NSE sectors and themes
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