Friday, May 25, 2012

The Bullish case for new highs

New Highs are bullish. This very simple rule can enable traders to take many profitable trades (go long at new highs) and also avoid losses (never short when prices are making these highs).

On Thursday, the Nifty drifted down. Then around 11 AM, Nifty futures crossed 4843 which was the day's high till then. Remember, new highs are bullish. So we went long at 4843. In just an hour Futures were touching 4900 which was out target. Wow! Great trade.

Do all new highs succeed? The answer is a categorical NO. I think 2 out of 3 new highs will pullback, often act as tops. The one that succeeds compensates for the failures.

What happens when we buy new highs? We are going with market flow. That is always a good idea.

4 comments:

cho said...

wonderful idea to buy on dips today...........

Vasant kumar said...

Hi Sir, then why shouldnt we go short at NF 4823 which was first one hour low and broke in the next hour. why new highs/not new lows?

Gireesh Kumar SR said...

“Youths are not useless, they are used less
Youths are not careless, they are cared less”

Sir..

Yesterday am used less... because of fear, my mistake..
Now I have no fear, the power of knowledge with me...

Gireesh Kumar

MusicBhai said...

I do not agree with you. If the new highs are being made, one should wait for an opportunity for the market reversal. What goes up, will go down eventually. New highs could be exhaustion rallies or could be traps too. Trader must weigh every situation based on the merit. One may not generalise like this.