Monthly Archives: March 2013

way2profits

Positive divergence honored.

Yes, Nifty and Bank Nifty both honored the positive divergence, and moved higher in last session.

Now what should be trading strategy?

Ideally, trader should go long on Nifty with a stop loss of previous days low. But from current market price of 5682.55 (spot) low is far below at 5605. In such case I would recommend going long to my readers.

You can buy 5700 CE in the range of 90-95 with stop loss of 69, or you can also buy 5800 CE in the range of 45-50 with stop loss of 25. Nifty will find resistance near 5800 and where we have opportunity to book profit. So don’t expect Nifty to rally sharply from here, but we should also not miss the trade.

Coming on Bank Nifty. Although Bank Nifty has honored positive divergence, but still it trades below its major 200-day EMA, so I would recommend going long immediately. Yes, aggressive traders can look to buy Call options or Sell Puts, but it all depends, how much risk you would like to take.

CNX IT also shows some positive signals, but I sense upside is limited from current level, so better we should not take chance there.

Is there a possibility of revival in Nifty and Bank Nifty?

Genuinely, it is very early to take sure shot bet on Nifty or Bank Nifty. As depicted in attached chart, both Nifty and Bank Nifty moved below its major 200-day EMA, but there is clear cut positive divergence in both these charts, whereas CNXIT shows neutral sign as on date.technical analysis on nifty-way2profits technical analysis on bank nifty-way2profits

Keeping above facts in consideration we should not bet aggressively on market, because shorts will also not give you some outstanding results, and to turn bullish again we need some confirmations.

How we get confirmation then?

Keeping expiry day in consideration, we should avoid trading or take lighter positions. To confirm positive divergence nifty and bank nifty should give some reversal signal first. Firstly, it should not make lower lows to confirm divergence and next it should move above major average.

Nifty should move above 5720 and Bank Nifty should move above 11600.

Please understand that, it is not necessary that prices should honor every divergence, so there is equal chance that divergence can be negated and prices can move lower further, so don’t be overconfident.

technical analysis on nifty by way2profits

Ride with Trend, Not with Perceptions.

Weekly Outlook

Nifty as on 22th March, 2013 – 5651.35

Week begins with opening gap down straight away at 5816, and remained below this level for whole week. Sometimes it becomes difficult to trade in such type of situation, where many thing comes at a place and traders get confused whether to take short position or not, because our sell level was 5835. Anyways, if you have confidence on your system than you should not doubt on your system in any given condition, but this confidence only comes with experience. On Monday morning only, few of my readers called me and asked me whether we should wait or sell, and my answer was straight, below 5835 there is no meaning to think twice, only concern was stop loss, and I asked them to put stop loss at 5861 previous day’s low, and then after they managed the position. Then after I got to know that they take early exit in profit, and could not ride the profit, anyways it happens with everyone, including me.

Coming to recent development, as you can see there is clear cut positive divergence between price and RSI (14), and now we have to see whether it honors the divergence or not. I sense it will, but it has still potential to go down further, so rather taking early call we should wait and look at Monday’s price action.

Strategy should be like this, if prices manage to stay above 5670 in first half than, you take long position, and if Nifty moves below 5650 than you can take short position with stop loss of previous day’s high i.e. 5695 level.

Last week, I was expecting Nifty to turn positive, but it moved reversed, anyway I was prepared for that. I know you will be thinking that, now what my stand is? As last week I have mentioned that I am not extremely Bearish on Market and still I maintain my stance, but if Nifty moves below 5550 and gives close below this level than I have reason turn extremely cautious and I will turn extremely bearish below 5400, yes levels are far from here, so you have leeway till that point.

But lastly I would suggest you should Ride with trend, not with your Perceptions.

Are your cornered by your Analysis???

Yes, my question is right, are you cornered by your analysis? Some or other time in life of analyst, it happens that you are cornered by your own analysis, and let me confess, it happened with me also. But, this applies to only for them, who have guts to come ahead and bugle their analysis in front of others. Who has put in efforts and come to some conclusion, and after which shown courage to give Bold Statements.

Above certainly not applies to a category, who always has signature catch phrase “dekha maine bola tha” who always comes ahead for everything and actually nobody heard them saying anything. And in my experience there is huge crowd fits into this category, so lets excuse them.

When such kind of situation arises, analyst has to stay bold enough to accept his limitations and come ahead with fresh view. I believe analyst is not God, if you are accepting some holygrail from him than it is your mistake not his. Yes, I always respect and like to be friend of those who have courage to come ahead and share their opinion with substantiating research, rather being friend with those who falls into category of “dekha maine bola thaa”

So keep sharing your view, no matter if you are cornered.

One tour in currency space.

Generally, I get less chance to look at currency charts, but still sometimes I look at it. Let’s begin with Dollar Index, than EUR/USD and lastly USD/INR.

Dollar Index as on 15 Mar’13 – 82.13

On 14 Mar’13 Dollar Index made a high of 83.16 and finally ended 29 days (trading days) long rally (It seems that rally is ended). From 1st Feb’13 onward prices made a bottom of 78.19 and moving on continuing basis, in between easily taken off resistance of its major 200 DEMA. I am saying that this rally is ended because of last two days price action, which has given two big red candles confirming underlying weakness in prices, with that RSI (14) has also confirmed the fact by moving towards 50-line. And also as depicted in attached we can clearly see rising trend line breakout.

dollar index-way2profits

Dollar Index as on 15 Mar’13 – 82.13

It seems that prices moved in impulsive structure, so I expect prices to retrace prior move by at least 38.2% or higher, so initial target comes near 81.52 and next 81.00 from current level. Traders can keep stop loss of 82.61.

EUR/USD as on 15 Mar’13 – 1.3074

Similarly EUR/USD shows reversal signal after falling spree from high of 1.3703 by making a bottom of 1.2911 on 14 Mar’13.  FIBER stands close to its major 200-DEMA, and also prices broke out from falling trendline as depicted in attached chart.

EURUSD-way2profits

EUR/USD as on 15 Mar’13 – 1.3074

Traders can take long position above 1.3105 with stop loss of 1.3016. I expect initially prices to test at least 1.3225 and next 1.3300. Subsequently we can easily trail the stop loss and play the ride.

Finally,

USD/INR as on 15 Mar’13 – 54.02

I am starting with weekly chart. As it is clearly visible Head & Shoulder pattern. Few weeks ago one of my friend has drawn out attention on this pattern, with his analysis, but at that point in time I was not convinced to turn extremely bearish on Dollar, but as pattern is progressing I am becoming little skeptical.

usdinr-way2profits

USDINR Weekly Chart

Few weeks ago prices gave false breakdown and immediately reversed; but after that again prices struggling to go higher and that is the sign that is alerting me.

usdinr-way2profit

USDINR Daily Chart

From daily chart it is evident that prices moving in congestion, not giving clear clues. But I sense that prices will move lower, and will test support of major trendline as depicted in attached chart, and after that we have to take fresh call on USD/INR price movement.

 

 

 

 

 

In search of clarity.

In the last week, after giving bearish view, Nifty gave big surprise on last Thursday by turning positive, and again today i.e. on Friday Nifty turned weak again. In such choppy scenario what should be our stand as a trader? I will try to answer your query. As I am not being paid by you, so please expect genuine and unbiased view from me, and still if you find mistakes than you are most welcome to put your comments.

way2profits, way2profit

Nifty as on 15 March’13 – 5872.60

Let me start with giving one bold statement, Nifty has not turned its party with Big Bears, still there is a hope and I am hopeful,,(I am talking in respect to slightly longer term view), obviously in short term correction can happen and you have to stay with trend, even in short term also. So my bold statement is, I am not extremely Bearish on Market”, If I will turn I will let you know. (Caution, prices are standing very close to turn whole game).

Now coming to recent price development.

As you can see in attached chart, twice Nifty tested 5971 and turned lower, so it becomes good resistance point to watch for. And with that I have drawn Fibonacci Retracement in corrective leg from high of 6111.80 to low of 5663.60. Golden Fibonacci Ratio 61.8% of this move comes at 5940, so you have another strong price point to resist price movement.

Taking above retracement, 38.2% ratio comes near 5835, where in past prices made swing high near 5815, so all in all you have a good support here.

Momentum oscillator RSI (14) exhibiting bearish tone, but still it needs confirmation from price movement.

What should be trading strategy?

I am risk-averse trader, and I would always like to take safe bets. Traders can go long once prices moves above 5970 mark, or go short below 5835. Now, stop loss will be based on your risk appetite, but ideally if you are keeping stop loss of 40 points than now you have to keep stop slightly higher, considering high sudden high volatility in market. If you entering in to trader once prices close above or below, than your stop loss should be previous day’s low or high (keep margin of few pips).

Let me also tell you, according to Elliot Wave Analysis, current price action is corrective nature, and I also agree with that, but rather preempting I would like to go with flow, because anyways, even if we know right wave, we are not going to ride wave based on principles, so better stick with what you are comfortable.

I will be waiting for your replies….

 

way2profits

Surprised???

I have asked to go short on Nifty, and positional short on Bank Nifty on 12th March (CLICK HERE) by yesterday I was quite happy that everything was on path, and bank nifty fell significantly just in one day. Today morning (14march) I was receiving some mails, that go blind sell on bank nifty and nifty, due to some Cobra post release (yet, I have to go through the same), and to surprise in extremely negative news market went up sharply. I am sorry my friends, but you are killed brutally, by some smart players. And I strongly believe that, if you want to become trader than keep your ears closed and eyes open on your trade, nothing else..

But let me also admit that, even if I would have seen chart, I would not at all recommended to go long, infact I would continue to stay short, and market proved me wrong. Anyways it is market,,and you cant argue.

Nifty as on 14 March’13 – 5908.95(Spot)  Bank Nifty -12020.75.

Nifty again stand at a similar point where I have given short call (5908) after making a intraday low of 5791. I would say here, let market settle tomorrow, anyways it is Friday, don’t go long or short,,,I don’t see any clarity as of now, so don’t try to be extra smart.

As far as Bank Nifty is concerned it has not taken away my stop loss of 12250. Now if you want to play risk than hold position or get out,,still you will earn…hmm…