My earlier post for today was Is a short term low in place - ask Infosys? . You may like to read it to get the context clear.
Infosys reports at 9 AM today. The markets are likely to respond strongly to Infosys guiidance, moving up or down. This means we could be seeing a trend day today. What are the signs of a trend day?
1. Gap. Up or down. This is one gap that could be a continuation gap.
2. The trend day is usually preceded by a narrow range contraction. Tuesday was a narrow range day and Wednesday saw a big down move. Again, yesterday, Thursday, the Nifty traded in a narrow range. Therefore, this condition is met.
3. The trend day is usually caused by some event - world markets, or news. Today, we have Infosys guidance.
How do we trade such days?
Once you are sure that the day is developing into a trend day, look for pullbacks to a moving average (20 period is good enough), or to the middle line of an oscillator. (for RSI it is 50, for the CCI it is zero). A consolidation can sometimes replace a pullback. These pullbacks will offer opportunities of picking up some points in the Market.
Take care because the markets are not predictable. What starts as a trend day may eventually end up as a choppy range, or, even as a reversal day. Taking profits at some point is a good idea. If the trend pesists, maybe you can reenter.