Timing Chart

Investors can use the Timing Chart at the time of buying and selling, to gain from the short term variations in share price.
Remember that, timing the market with 100% accuracy hasn't been possible till date with any method. Timing chart is just one way to understand price trends and make investment decisions accordingly, to get better returns.

How to read Timing Chart?
Moving average (MA) is an indicator showing the average of a stock price over a defined period. Moving averages smooth the volatile price data and form a trend following indicator. Remember they do not predict future price direction, but rather define the current price trend. Upward trend is established when a short-term average (e.g.13-day) crosses a longer-term average (e.g. 50-day) from below. Downward momentum is confirmed when a short-term average crosses a long-term average from above.
A simple moving average is formed by computing the average price of a security over a specific number of periods. For example, a 13-day simple moving average is the 13 day sum of closing prices divided by 13. Old price is dropped as new price becomes available.
The general length of the moving average defines the timeframe for the trend. If you are using a 13-day MA and 26-day MA, it would be deemed short-term. Similarly if you are using a 50-day SMA and 200-day SMA, it would be for medium/longer-term.
Two moving averages can be used together to generate trend signals. For example, 13 day MA (relatively short term moving average) and 26 day MA can be used to see short term price trend. If 13 DMA is below 26 DMA, short term trend is downward and one can wait till the trend reverses.



Similarly for medium term trend one can use 50 DMA and 200 DMA charts. If 50 DMA line is above 200 DMA line stock is in uptrend in medium term. Moving averages can also be used to generate signals with simple price crossovers. An uptrend signal is generated when prices move above the moving averages. A downtrend signal is generated when prices move below the moving averages.
Before using moving averages, we must keep in mind that moving average crossovers produce relatively late signals. The longer the moving average periods, the greater the lag in the signals. Also, these signals work better when a good trend takes hold. However, using moving average may not be fruitful when market is witnessing sideways movements.