Indices and Ratio Charts – Banking outperforms and Rest Consolidates

Indices and Ratio Charts - Banking outperforms and Rest Consolidates

A ratio chart compares the performance of one asset to another by dividing their prices:

Ratio=Price of Asset A / Price of Asset B

If the ratio is increasing, it means Asset A is outperforming Asset B.

If the ratio is decreasing, it means Asset A is underperforming Asset B.

This helps you identify which asset is stronger or weaker over time — a concept known as relative strength.

Using Ratio Charts, One Can

1. Identify Leadership or Relative Strength

2. Spot Trends and Reversals

3. Trade Based on Mean Reversion

4. Use as a Confirmation Tool

 

Below are few Ratio charts compared to Nifty 50