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Tata Motor Price action shows Momentum Divergence

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Momentum should precede the trend, changes or shift in Momentum can indicate weakness of the trend. Its seems like thats the case in Tata motor Share prices. Downtrend in daily chart of Tata motors is reflecting a shift in Momentum, as measured byMACD. On the side note forPrice action traders, I am not a big fan of Momentum Indicators such as MACD, ROC etc. But they can be used as supplementary tools in trend analysis. Heres the current Overview of Share price.

Tata Motors Price action trading analysis shows Momentum divergence

As usual, the downtrend in Tata motors started with constantly disappointingQuarterly results. We all know that markets are irrational! Just 2 or 3 Disappointing Quarterly results are enough to cause panic among Investors. Soon Share prices started to tumble from the high of430and trading close to300. Based on the perspective of Dowtheory, its an Intermediate Downtrend.

Within the Downtrend, there were multiple corrections, retracements andPullbacks. We can consider them as constant interruptions of Counter trend traders. Especially investors and stake holders who assessed theintrinsic valueof Tata Motors might have stepped in to stop the declines, which didnt work out. These formations also gave excellent opportunity for trend traders one couldve initiated position in derivatives, based on these setups.

In the current outlook, Market structure is still in Downtrend butmomentumis not correlating with Price action. We can see this clearly with MACD (Experienced Price action traders can spot this just by looking at the price chart without the help of any Indicator). Technically speaking, its a momentum divergence, which means bearish momentum is declining. There are two possibilities which could happen 1) Trend might terminate and prices can bounce back or 2) Market sentiment can influence the price action, Trend continues even further. Keep an eye on developingMarket structurefor answer. Tata motors may take the spotlight in coming weeks.

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About the author

Balaji is a Trader, Investor and Self published Blogger. He wrties frequently on his website Balaji is specialised in applying systematic Price action trading strategies and Global Macro techniques on financial markets such as Equities, Dervatives, Futures and Bonds. He is well versed on both International and domestic markets and has trading experience of more than 8 years.  
As a trader his core purpose is to generate superior risk adjusted returns on consistent basis by applying Flexible risk managment combined with a Postive expectancy of Price action strategies. He writes passionately about Technical analysis, Trading strategies, Price Action setups and Global macro events. 
Apart from trading and Blogging, Balaji also mentors aspiring traders, Investors on becoming succesful in highly competative financial markets. He offers permium trading course on which he covers Price action trading methods, Institutional trading strategies and Macro trading.

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