Friday, September 4, 2009

Nifty is standing at short term support

Intra day charts for the Nifty suggests support coming in at 4570 approximately. The 60 minute chart also shows a rounding top and a bearish head and shouler with a neckline around 4570. This zone becomes significant in deciding if the Nifty will breakdown and move towards a deeper correction, or bounce back above 4600.

Since 4570 is closeby, traders may like to take long positions on dips with a stop below this support.

Gaurav asks: "The current pattern on Nifty daily charts suggest a triple top or ascending triangle? Both these patterns have a opposite interpreation. On a longer term basis we also see a inverted heads and shoulders with neckline around 4700. Sir what is your opinion on all these patterns?"

My Notes: A triple top - yes (June, July, August) but an ascending triangle is difficult to locate. The triple top is confirmed if prices berkdown from the valley created around 3950, so it requires a lot of decline before it is confirmed. We should use a trading range between 4740 and 4350 to determine direction. On the longer term we have the inverte H&S with neckline around 4760. This column has written about it earlier on several occassions. The trading range breakout will also confirm this pattern, so we just have to wait and watch.

9 comments:

Ashish said...

Hello Sukhani ji,
I want to do Short Term Positional Trading in Nifty only.I have basic knowledge of TA.But i dont want to leave Naked positions overnight.Can you suggest any strategy?Can Hedgeing be a good idea?If Yes,Do you conduct any Seminar or Classes on this?I'll be very happy with 3% return monthly keeping my Capital safe.Looking forward for your Kind & Valuable suggestion.Regards.
E-mail:ashish.mcl@gmail.com

Gaurav said...

Thank you sir for clarification.

Sir, I was testing a strategy based on NR7 setup. Is there a book which i can read to understand it better especially the exit criteria for the trade.

Will really be helpful if you could guide me here.

Regards
Gaurav

Tripurari said...

Sukhani ji Namaskar,

I have lost my life time savings in F&O.Out of 14 lakhs
I am left with 50 thousands.
I need your help,would you
pleas help me Sir.
I am tclohani@gmail.com

Junaid said...

Two same ranged days followed by a big upside bang. What happens next..??
I tried to go through the historical charts, tried to locate the same kind of situation if at all we had in past and check what has happened next.
Results were quite mixed.
1. I could locate three situations wherein "The next day has opened at nearly abt same levels and hovered up and down throughout the day. Simply ranged day.
2. I could locate two situations wherein "we Have had flat opening resulting into a big down day (of abt same magtitude as of the previous day).
3. I could locate only one situation wherein, "We have had a modest gain to upside:.

So by looking at this data, odds seem to be in favour of range trade if not in favour of Down day. Lets see what happens. After all, Market does what it wants.

men said...

Mr. Sudarshan, when you were on Bull's eye you had suggested Orchid chemicals, which I bot but after waiting for so many days I sold out yesterday only to find it moving higher, my question to you is in an inverted h/s pattern does the target always be the height? and secondly is there any time frame in which it it to happen? On the show the next day after you suggested this it was also up then why did u exit the same day when you could carry forward 2 trades? Suggest some good reading material please.
Thanks,

aashish said...

Most momentum oscillators suggest a topping formation.

If one looks at the past, the market rose despite oscillators being clearly divergent. Look at EoD from 4636 (broken out by the Ben Bernanke Gap on the 19th Sep 07) through 5747, 6005, 6201.65, right up to 6336 on January 09, 2008, where the first gash came a minute after the news broke that the REL POWER IPO was oversubscribed 4.56 times or thereabouts at the first count.

I guess it doesn't really matter that the EoD osc. are weak because the market can do much more than what the average oscillator may suggest.

Shazia said...

Sir,
On cnbc tv you said that if nifty crossed the 4760 mark then it may well be on its way to form another bubble, why ? Secondly i have read about gaps and the gap which was created in May after election results was with extremely low volume and which is not qualifying for a runaway/breakaway gap although the next day when the markets opened for trading there was huge volume. I am confused as to what kind of gap this could be and can it be filled in future?

thanks
Shazia

Student Of Market said...

Dear Sir,

today being the teacher's day, I want to express my deepest respect to you who has taught me so much in trading.

The most important things I have learned from you are - Market is bigger than any analysis ( including yours! ) ; The trend is intact until it is broken ( i.e. do not anticipate end of a trend); Focus on following a disciplined strategy rather than focusing on making the correct call as that is what works in trading.

Thank you again.
StudentOfMarket
stockmarket-methods-in-madness.blogspot.com

Shazia said...

Sir,
After a breakdown in the nifty below 4650 it bounced off the support of 4570 but did not spend any meaningful time there, what do you consider this as? On friday it closed above 4650 at 4680 spot. The nifty is now more squeezed in a narrow range having almost the same top but ascending bottoms. Technically it looks like the bulls havent given up buying but the bears have given up selling beyond 4750, which is why there is no short squeeze to pull the markets up.