Monday, December 14, 2009

Trading ranges are difficult to trade

The Nifty has gone inside a narrow range, making intra day as well as swing trading difficult. Traders may well identify their own levels of this range, then decide to trade he Nifty when it comes out of these boundaries.

Mid cap and small cap stocks have been outperforming the Nifty. The mid+small cap rally should continue while he Nifty is undecided, If the Index finally breaks out on the upside, then we should see more fun in the mid+small segment, but IF the Nifty breaks down and moves into an intermediate downtrend, I do not think that mid cap rally will continue.

Test or Breakout ?

The Nifty did touch 52 week highs on Friday, Dec 11 before falling on the back of IIP numbers. Now, when price touches a previous top, there are two options: (1) It may be a test of resistance leading to a confirmation that the resistance holds OR (2) It can be a breakout leading to higher levels. Traders need to undertand the significance of Friday's price action, since it may have intermediate implications.

4 comments:

mynac said...

Sir,
Test or Break out?
Answer is very simple.i.e. if it will fly then it is a Bird,and if it will sink then it was a Frog.

men said...

Could you give your views on Bharathi, how should one view this as a buy and hold stock? This would be a very nice example of BUFFET Vs Technical Analysis case study. Time frame to consider is >2 years.

data said...

Sudarshan Sir,

Is it possible to arrange for the Nifty Price Range Vote again at this juncture.

Regards,
Alok

saket said...

Sir i think to be a successful trader you need experience and as time goes by you have to develop your own methods only then can you be successful you have to have your own methods because only you can understand your trading style your risk apetite so you would only be comfortable when you form your own rules.
I recently read a book by nicolas darvas can you suggest some books of successful traders as that helps a lot.