Tuesday, July 29, 2008

A Trading Range Market ?

The Nifty fell by 150 points today, bringing it down to 4175. This is almost 400 points down from the rally highs recorded last week.
Below 4200, the intermediate trend is down, the short term trend is down while the primary trend has been down for a long time. It is likely that the Nifty may fall down to test the 3800 lows again. But when ? Before a decline occurs, we can easily see a see-saw market in which the Nifty falls and rises alternately. This means we can see a rally tomorrow, then maybe a follow through again on the next day, and then a sudden dip (after inflation numbers?).
This is the sign of a trading range market. The Index may have defined a low at 3800, while it may also have defined a high at 4550. Between these two limits, the Index could move up and down alternately, giving the impression of activity and trend, but essentially remaining in a trading range.
How do we trade such a market? By identifying extremes on the charts. When a rally is 'over-bought' consider selling while an 'oversold' condition deserves a buy.
The broad trend of the market remains down. Thus, a short position is likely to reward better, as compared to a long position.


anshul said...

i have benefited by ur clear cut advice about markets..i want to thank you from bottom of heart... iam full time trader since 3years and i always watch ur views on this blog daily and also on cnbc...for newbies traders who always blame techncial analysts for their losses..plzz use some common sense ,brain and should improve money management system before blaming anybody..trading is about adjusting sail according to wind...and mr sukhani is following the same....eariler i was not confident about techncials but after watching people like mr sukhani on cnbc and from lots of book now i belive stock market is like sea and we are treasure hunters and technicals helps to find right path for teasure hunting..

rohit said...

i hav studied ur blog since 10 days which helps me to understand about sentiments of the market not fundamentals