Tag Archives: Trend line

Nifty Weekly Technical Outlook for 01st July, 2013

Surprising- Gap Up, just after expiry.

Nifty Weekly Chart as on 28 June, 2013

Nifty Weekly Chart as on 28 June, 2013

Nifty Daily Chart as on 28 June, 2013

Nifty Daily Chart as on 28 June, 2013

Week ends and we start evaluating ourselves, whether we went right or wrong. It is time to rectify and learn from the mistakes. We never expect to go right every time with every trade, but even if we succeed by more than 70%, then we believe we are on a right track. Now, it is up to our readers and decides whether we went right or wrong, during last week. Feel free to write your comments.

For us trading in the markets are like playing some adventurous games, where we have to undergo many emotional factors, of fear, greed, anxiety, and what no, and finally our bank accounts shows whether we are able to succeed or still we have to do bit more.

Generally week of expiry is always bundled with full of drama and unexpected moves. To us Fridays move was unexpected. If you are a market savvy then you must agree with us that, next day after expiry is very dull kind of session, like market is on holiday mood; but, it worked otherwise.

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Trendline can make wonders!!!

Yes friends, it happens that we forego simplicity and strive for more and more complex scenarios & solutions.  Beneath this mentality, human nature lies which discard the simple in favor of complicated. (More difficult to understand, more accurate will be analysis??) Personally, I don’t believe that complexity can give you better solutions every time.  You also have to look in for put in efforts and reward, that is what I understand; look for risk(time)-reward ratio man…

We are thought and also we have observed that some simple technical tools can do wonders and can give you an excellent, out of many simple tool, one is Trendlines. Trendlines are one of the most dynamic & versatile tool to apply in the analysis.  Despite being extremely useful, trendlines are often overlooked.


NIFTY AS ON 30/01/2013

I have applied trendline in below attached chart of Nifty, which itself speaks thousand words than I can write here, and you don’t need to be expert to understand from visual presentation.  As we can see Nifty is moving in an uptrend from mid May’12.  I have drawn rising trendline from the low of 4770.35, and adjoin it to the next immediate higher low of 5032.40, that’s it, after that I have only extended the line, and you can see how swiftly this trendline was respected, prices took support on this trendline, twice then after.

Now second observation- recently prices has formed a channel, where prices moved in a range, where it touches upper boundary of line and again retraces back to lower boundary.  Although, on Nifty this range is very small, but as you can see it is trading it.  Basically, prices are moving in a rising congestion, and breakout from this congestion is quite obvious, can you stay in a single room, when you are use to stay in one large apartment?  Obviously answer is no, you have to make compromises, and that is exactly what is happening with prices, one or another day compromise ends, and prices can blast.  Now, don’t ask me in which direction, you yourself guess and understand, do I need to answer your question.

Lastly, third observation which I like to highlight here is, just look at momentum oscillator RSI (14) there is clear cut divergence between prices and oscillator, which clearly indicates that momentum is not in tandem with price rise, alternatively, momentum is declining as prices are rising, such situation does not holds for long, either prices or momentum has to make compromise, let’s see who does?

Now let me give you a clue, once prices moved out from rising channel, you should be on alert, and if it breaks below than wait for day or two and initiate short position. Here let me speak some wise words….Never pre-empt the market, ask the question to market, rather asking to anyone, and I am sure it will give you answer.  I hope now you got the answer….hmmm

Best Trading Strategy

Dear Friend if you are in search of best trading strategy which can earn you 100% returns in any market condition, than your search does not end here.  I am saying this because, you are in search of Holy Grail, and if I say straight forward than the word is myth.  Let me explain you what is Holy Grail – in simple words, for every trade you are certain about outcome, so you are expecting 100% accuracy in all trades you take.  That is why I am saying if you are search of Holy Grail of trading technique than you are fooling around with yourself.

In last couple of days, I received mails regarding;

  • What is the best trading setup, which can assure me best of returns?
  • How to improve my performance and take it toward 100%?
  • Is there any method, where I don’t have to put stop loss?

Above question are my understandings of their questions, which directly, indirectly ask me the same question.  Here, I try to answer above questions, and let me confess, I answer according to my little understanding of Technical Analysis, there can be much more intricacies involved in it, which I may not be able to answer.

Trading setup:-

It is nothing but the prefix methodology to Buy, Sell or Hold the stock.  As a basic principle, trader should know in advance where to enter and where to exit, if you don’t follow this simple rule than for sure you are out of the game very soon, if not today and than for guarantee tomorrow.  Defining this entry and exit is nothing but defining trading setup.  With any method you can pre-define your entry and exit; it all depends on your knowledge, experience & comfort.  There are number tools and methods are available, you can choose according to your understanding.  Let me take you through some most common methods,

  • Based on Moving Averages like Simple, Weighted & Exponential
  • Based on Trendline, Pitchfork line
  • Based on Momentum Oscillators like RSI, Stochastic, MACD, ROC, KST and many others
  • Based on Gann Square of Nine, Gann Angles & Gann price forecasting methodology.
  • Based on Elliot Wave Analysis or Glenn Nelly’s method
  • Based Statistical calculations, which are most commonly known as Algorithmic Trading.
  • Based on Price Behavior like Candlestick Study, Chaos Theory

Above is just broad outline on trading methods, each topic requires elaborate description, which I will try to cover in subsequent articles for sure.  From above, you can take any one method of combination from it, and just back study the outcome.  Whichever method gives you confidence can be Holy Grail for you.

Let me tell you very clearly, there is no method I came across which assure you 100% return in all market scenario and I am sure with this prominent technical analyst will agree with me.  Any method can give you best returns but you have to understand its limitation too.

And to answer last question, as such there is no method in which you don’t have to keep stop loss, but yes there are methods with which you can certainly increase your risk reward ratio.  For detailed explanation about Stop loss, you can read my article  Most Hated but Most Desired part of a Trade: – Stop Loss