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Since the bull market started in 2009, a roof has been placed on the upside movement, at 5400 in the Nifty. This resistance is now undergoing a challenge with the markets seeing a sharp rally, reminiscent of previous bull market moves.
Let us consider some possibilities:
1. The Nifty may move up, breaking out above 5400, then slowly moving up with a pattern target of 6000 at the minimum (assuming trading range is 4800 to 5400).
2. The Nifty may move above 5400, but does not get the momentum to move much higher, ends with a retracement that is higher than 4800. The market ends up in another trading range with support higher than 4800 and resistance also higher than 5400.
3. The Nifty crosses 5400, then falls to create a false breakout. Markets remain locked in the 4800 – 5400 range.
4. The Nifty fails to cross 5400, begins its much awaited decline.
There are more possibilities but these four will suffice. The key question here is: How do you trade? The answer lies with the trader since there are as many ways of trading as there are traders.
One possible strategy could be:
A breakout above 5400 is taken as a breakout! Buying is done with a stop loss identified on charts.
AND,
If, the Nifty closes below 5300, a short term pullback is assumed. Short selling will be done with a stop that is approx 2 ATR above entry price, th ATR calculated on 120 minute charts.
A strategy, any strategy will make trading easier and profitable.
A key question that comes up for traders is the use of Fibonacci retracements in our trading. While these retracements make a lot of sense since they represent ‘Buy on dips’ or ‘Sell on rallies’, how do you actually use them.
Now, this Free, educational video discusses Fibonacci Retracements.
A key question that comes up for traders is the use of Fibonacci retracements in our trading. While these retracements make a lot of sense since they represent ‘Buy on dips’ or ‘Sell on rallies’, how do you actually use them.
Now, this Free, educational video discusses Fibonacci Retracements.
Fibonacci Retracements: Use Them In Your Trading
A key question that comes up for traders is the use of Fibonacci retracements in our trading. While these retracements make a lot of sense since they represent ‘Buy on dips’ or ‘Sell on rallies’, how do you actually use them.
Now, this Free, educational video discusses Fibonacci Retracements.
Click Here to Begin the Learning Process
NIFTY WATCH
The U.S. markets gave up all intra day gains and actually filled the opening gap. There is a low risk, high reward trade setting up in the Indian markets. With 5400 as resistance, we have a fair probability that the Nifty will begin a move on the downside. Traders may take a short position, with a stop above 5400 or slightly higher.