Nifty Technicals for 11th Jan 2012

Nifty is temporarily bullish

Nifty technicals say that, this rally is not yet over and we may expect further upside temporarily. As a day trader or swing trader…. When to buy? Wait till stoch reaches point “E” marked in the chart and look for it to come out of OS zone and buy. Hold it until either _ve divergence or till it breaks recent swing low on your time frames.

This does not mean the trend is reversed. The downtrend is intact. Unless we break the downtrend line and major swing low, we continue to be on the shorter side.

As a day trader or as a swing trader we are less bothered about long-term trend. We go short when our technicals say to short and we go long when our technicals signals long… that’s it. We leave everything else to the experts!!! LOL….

Nifty Technicals for 9th January 2012

We have ended the first week of January. This week was full of paradox. There was absolutely nothing for either a Swing Trader or a Day Trader.

Now based on what we have lets start our analysis for the coming week.

Weekly chart.

On weekly chart stoch has a slight +ve divergence which is an indication that bulls are desperate to holding on to their strength. The area between 2 vertical yellow lines show the divergence. However we remain with the current downtrend and at 4800 we have a rock solid resistance.

Rule: Unless until proved otherwise we remain with the current dominant trend and we always take the trades in the direction of the dominant trend.

Nifty weekly has a slight +ve divergence

Daily chart

On daily, stoch stayed in OS for extended period twice (At point A and B) signalling heavy bearish sentiments before reaching point C yesterday. Hence daily continues to be in bearish mode.

Nifty daily has to prove that it wants to break last swing high

60 Min chart

On 60 Min chart at point A stoch stays in OB for extended zone indicating bulls are trying their best to do something for the new year!! However next 2 days they fail to capitalise on their good work like Sachin and then yesterday we had a downside breakout out of consolidation. The last session belonged to bulls. Still the day ends with no results as the close was still below last 3 days high. Hence no trade to be taken until we get better clues.

Nifty 60 Min is in neutral zone

30 Min chart

On 30 Minutes we have a version of _ve divergence. The bar I have marked has good volume meaning the low and high of that bar will decide the outcome of coming week.

Nifty 30 Min has a version of _ve divergence

Conclusion: Since we have conflicting signals on multi-time frames, we have to be in a watching mode and once the engine heats up we shall sit behind the steering.

Nifty Technicals for 6th January 2012

Yesterday we had a false breakout coupled with narrow range (Marked as no 1 in the chart) and today was one more day of narrow range (Marked as no 1 in the chart).
That means we have now 2 consecutive pressure cookers.
Rule: After 2 or more narrow range days, expect a huge range. That is either tomorrow or Monday.

Now which side will it move?… Answer is simple… In the direction of the main trend…. At the same time you can see the stoch reaching overbought zone just with the help of 2 bullish bars meaning that bears are heavily dominant.

However the logical entry would be taking a short entry on break of today’s low (No 2) and keeping the S/L just above the high of yesterday’s high as well as false breakout (No 1). That’s how a technical trader has to think.

Nifty daily has 2 pressure cookers

Nifty Technicals for 5th January 2012

The chart says it all.

A false breakout of yesterday’s high means we are over with “New year hype” and ready for resuming our original direction…… The risk is maximum of 50 pips even if you have taken a short positions at the last session. The stop is at the high of today i.e: just above the breakout failure bar.

Nifty false breakout on daily

Nifty Technicals for 2nd Jan 2012

Lets start with weekly. Blue line depicts the high of last week and the price breaks that level initially but was pushed back by bears to close at substantial low levels. Hence it is a kind of false breakout on weekly.

Nifty weekly is a false breakout

The daily also is in bearish mode. I have marked a box in stoch column. The green line touches the red line and goes down indicating bearish sentiments. We do not have any kind of reversal signals so far. Hence we remain with current downtrend unless until proven otherwise.

Daily also is bearish as well

Seriously… One can just trade this false breakouts…. As I said several times earlier, “price first and stoch next”… Here, though the stoch remains in OB>5 bars… while it was coming out of OB price makes false breakout and gives a handsome trade…. Hence always FOLLOW RULES ….. BUT be adaptable…..

Again a false breakout

Overall technically, we continue to have bearish action prevailing….. In the name of “new year”, there may be a circus of “shakeouts”… However it is “sustaining” levels which is key for any kind of reversal…

Nifty Technicals for 29th Dec 2011

As far as Technicals are concerned, Nifty made an attempt to cross last week high but failed and now falling back on its own weight. It’s a kind of false breakout again.

As far as daily chart is concerned, we have again reached overbought zone in no time while before leaving Oversold zone Stoch stayed there for more than 5 bars indicating prevailing bearishness.

As far as 5 Minutes is concerned, a false breakout trade has become the most popular and we had that twice in last 3 days.

The way in which dollar is bulldozing other currencies, the big bears are thumped up and will be out there with drums and saxophone…..

Nifty technicals for 23rd Dec 2011

We had rally for 2 consecutive days now… Yesterday again we have a AA+ set up..

Nifty 5 Min chart

We had an apparent +ve divergence on 5 Min chart and it fetched almost 100 points. Entry and stops are marked in the chart.

Nifty 30 Min

As per the rules… we had a OB> 5 bars. Hence we short only once stoch comes out of OB zone without staying there for more than 5 bars with other conditions getting fulfilled.

Nifty 60 Min

Whatever I have specified above for 30 Min chart applies to 60 Min chart as well.

Nifty daily

As far daily chart is concerned, just see how stoch spikes up from OS zone just with 2 days of rally indicating that bears are dominant. According to me in majority of the cases the counter trend move do not extend for more than 2 days. Hence I expect a down day today unless bulls have something else in their kitty…

Nifty Technicals for 22nd Dec 2011

Morning friends….. Hope all of you are experiencing severe cold. Like all of us Market is also experiencing heavy cloud and rain….

I found that lot of you had confusions about how to go about it and take trades. I would like to make the points clear so that the confusion is eliminated.

We have to be aware that day trading and swing trading are entirely 2 different styles of trading. A day traders time frame is just 6-6.5 hours where as a swing traders holding period can be 2 days to few weeks to few months… Hence  a day trader is far-far flexible and needs adjustments on a consistent basis.

A day trader has to take decision very fast. He has to be able to reverse his position in a matter of minutes if the compassion requires him to do so.. Day trading requires immense mental stability… A day trader has to handle his emotions effectively…

See the difference. A swing trader can have only one trend for his particular position. Say he is short for 2 weeks…

However a day trader for example…. can have 4 trends in a single day…. 2 up trends and 2 down trends on 5 Min TF….

That’s why in my TJ “My day trading” thread, I have mentioned that mastering day trading is a really really tough task…

Now… why I have to say this is because during initial stages of one’s trading career, one carries bias…. bias creates opinion and opinion stops you from being flexible…..

Lets see what happened yesterday.

Nifty 5 Min chart

The year-end is coming. Lot of bulls are still trapped and unable to digest the reality… They gap up… No one can forecast such gap ups… Then just observe what has happened.

Now lets look at combinations of 5 Min, 30 Min and 60 Min chart and just see even on a counter trending day how Technical analysis works to its perfection.

We shall start with 5 Min chart.

Nifty 5 MIn chart

Once price gaps up, we have massive consolidation… An intelligent trader is the one who picks up all the available clues during the consolidation and gets ready with his position to ride the big move in the coming. Here what all clues we get during consolidation.

1. Stoch makes higher lows..
2. Stoch stays in OB>5 bars.
3. Price takes multiple supports at the low of the day.

This massive phenomena is called hidden divergence. I have seen plenty of this instances during the past….

A. Area representing consolidation with low volume.Stoch makes higher lows.

B. OB>5 bars indicating bullish sentiments ahead.

C. Dip in the price and price taking support at the low of the day and then swings back.Also note that when price takes dips to low of day stoch is in OS zone. remember my 2 rules…..

D. A conservative trader takes entry at D on break of high of day and an aggressive trader takes entry at point C itself.

30 minutes and 60 Minutes also indicated bullish moves with high clarity.

Nifty 30 Min chart

Nifty 60 Min chart

Below is daily chart. Just one day of rally is not enough to reverse the trend. When to say that a trend has shown a signal of reversal?

Answer:

1. It has to break the trendline.
2. It has to break the last swing high upside.

Nifty daily

Technical analysis – There is no guarantee that we get our dinner tonight!!!

Here is a column I have written on what is technical analysis and then I also wrote that there is nothing called 100%  guarantee on this universe….

Few days back when I was free and I was going through a thread and saw an opinion from a friend that charts and TA cannot predict the market’s future movement.Hence thought of sharing my view.

TA is like – Clouds have gathered.Sky has become dark.Light breeze.It also started lightening.We say “Its going to rain now”.We pack everything outside and bring them inside the home.We do whatever is needed to face the rain.

Now is it going to rain for sure?We do not know. We also look at circumstances and the time of the year.Here in south India if the clouds gather during June to September time, we say its more likely to rain.Now what does yesterday’s weather report say?it says clouds have covered the sky of south India.More importantly we know the monsoon passes south India during this period.

The clue from weather dept,the time of the year,the dark clouds, lightening,Monsoon all these lead to say that “its going to rain now”.

Now is it going to rain cent percent of the times, when we get all these symptoms?.No. not at at all.May be 2 out of 10 or 3 out of 10 times a strong wind may start and take away the clouds from the sky and it may end up in sunshine.

Now those 7 out of 10 times in which case it rained ,then stats of last 100 years which says Monsoon has entered South India during June-July, The stats which says it recorded 80% of the rain fall from June to Sep , makes us to say that “Its going to rain now”.Its again a psycholgy– For a common man, June -Sep = Monsoon, Cloud, Lightening,Breeze = Rain….

TA works similar way.Its not a pure science.Instead its a applied science,arts,maths and logic.Its job is to compile data and then interpret

1.% OF ODDS IN OUR FAVOUR
2.% OF ODDS AGAINST.

The easiest way of knowing how TA works is to go back and see the old stats.If it works even 40% of the times ,we are winners as our R:R always compensated those 60% odds which is not in our favour in this particular case.

People who want to argue ask”What is the guarantee that Monsoon will arrive this year?”.

The answer to such people is “What is the guarantee that you will get your meals this evening?”

Nifty Technicals for 21st Dec 2011

Nifty 5 Min

Same old story…… Once upon a time…

Yellow line was a multiple support line.

Box A is a gap down.

Box B is where every one ran for cover (The people who bought at multiple support line thinking it will go up)

Blue box is both breakout failure as well as force of bears….

Nifty hourly

On hourly I have put 3 boxes. Come with your homework…

Nifty daily

On daily we have a bearish engulf……………..