Monday, December 26, 2011

Why this mild bullishness?

For past few days, I have been suggesting on CNBC, that markets should see a rally, therefore day traders / short term traders should be positioned on the long side.

In this post, I will share with you my reasons for saying so. We saw a deep and sharp decline from 5200 to 4531, The Nifty bounced back from its 4540 lows with a gap up, on wed, Dec 21. This decline will see a correction, which started when Wednesday saw a gap up.
To me, the first resistance came at 4640 which was taken out on the gap up. Crossing of a resistance level gives a short term buy trade. The next resistance is at 4800-4840.  While markets will do what they want, for short term traders, the trend is up while the Nifty remains above 4640.

For the past three days, the Index remained above the lows created on Tuesday, at 4531. We now have a swing low. If the Nifty goes below 4531, there is a clear, sell signal coming in. An earlier sell comes in at the break of 4640. So far, the index remains above this number, it has the potential to continue with this corrective rally.

Now, corrections are difficult to trade, so traders don't have to take these long positions.  They can wait for this rally to exhaust itself and then take short positions as the bear market resumes.





2 comments:

Nikhil said...

december (year end) effect

shashank said...

Sir, is Nifty ready for any serious upside?