Tuesday, October 21, 2008

A trading range may be developing

As the Nifty closes higher, there is some reason to expect that 3050 may have become a short term low. Yet, the risk of a further decline is also high. The Index closed at 3235, just 185 points above the low point of 3050. Given the enormous volatility we have seen, it is possible for the Nifty to fall and close below 3050, in just one day. Traders should keep proper stops for all trades. They should also plan to take profits on any range expansion in their favor.

Having a view on the market helps the trader to plan and execute her trades systematically. One view is to assume that the market may go up to touch 3300 or even 3500 resistance. Traders holding this view should go long on dips, keep a protective stop below 3050. They should also take partial / full profits on any surge in their favor. Traders viewing the rally as a shorting opportunity can sell at current levels with 3300 as a stop loss.

The Nifty is in some kind of a trading range between 3300 and 3050. It is thus possible to have a long or short strategy for traders. I do feel that it is too early to suggest that the bear market is over. Just two days ago, the Nifty made 27 month lows. We need weeks / months of base building before we can call the end of the bear market.

3 comments:

rajivhtc said...

namaskar shri sudarshan sukhani,
extremely grateful to you for your wonderful, simple yet indepth analysis which is so crisp and clear. your blog is now an addiction and it visit it several times a day to see if you have added something new. when i get fresh comments i feel so happy and knowledgable. i must say you are doing great service to the investors like me who are often confused and bewildered with the wild moves of the market.
would be good if you guide those of us also who entered the market at 6000 plus level and got stuck and see our capital eroding everyday.
many thanks and warm regards
rajiv malik

jatin said...

hello sir,
can u elaborate , y there's vacuum / no support on nifty till 2000 ?? 2900 is 61.8% retracement , dont u think we can have a final bottom near this zone?? In 2003 bull mkt, nifty did retraced exactly 62% and then bounced sharply!!!

sumit said...

sir do u think one should start as a sub-broker in these kind of market