Silver Exuberance.

I will be on Bloomberg-Utv on Friday, Oct 8, at 3 PM. Do check in if you can.

Just a few days ago, I mentioned a bull market going on in Gold, and, Silver. In the past 3 days, Silver has moved up dramatically, almost becoming a bubble. Today, the metal opened with a gap on the MCX, then went on to touch 34800. Just 3 days ago on Oct 4, it was at 33000. To me, today’s gap up and the price level seemed like a blowout. I have been long in Silver. It was really a positional trade, but today’s price action and the really absurd price told me to sell and exit. Which I did. I am giving below the 60 minute chart for MCX Silver. Note the consolidation around 33000, then the breakout, the multiple long range bars and today’s gap up. Readers analysis and comments are welcome.

Small Dip, what lies ahead?

I will be on Bloomberg-Utv on Friday, Oct 8, at 3 PM. Do check in if you can.

The Nifty took a dip today, breaking down from a minor support level that came at 6150. While an intraday trade taken after the break was profitable, the question is: was this just a one day wonder or is there a trend behind this break?

Markets do not give direct answers to our questions. We have to make our trading plans, then stick to it. If the market wishes, we make money, otherwise we go through minor discomforts (minor, because we have our money management routines).

If a swing trader is short or wishes to take a short position, the stop is somewhere around 6185 – the mid point of the trading range. So with limited risk, the trader can go with market flow. A more conservative trader can wait for break of the second level of support which is at 6100.
Was it possible to go long at the close today, assuming that today’s dip ws just a one day dip? Yes, it was with a stop below 6100.

Here we have seen different ways of taking the trade on the same day. All of the traders could make money if they have discipline.

When Nifty is in a range

The 60 minute chart for Nifty Futures, given below has a trading range developing after a sharp rally.

For Nifty Traders, movements inside the range are unlikely to give much gains. A breakout above resistance or a breakdown below support should provide the momentum for further price movement.

Then, the first strategy is to wait patiently for the futures to emerge out of this range. Second strategy: For all of us, anticipation can lead to more gains. Here, anticipation means taking a position inside the range in anticipation of  breakout or breakdown. If our direction is called correctly, we get a head start in terms of entry. A third strategy is to buy calls and puts, then close the losing leg. (If the market goes up, sell the puts. If the market goes down, sell the calls). A fourth strategy is to step down in terms of time frame: trade the 5 minute or 15 minute chart for the smaller trend. If prices break out from these range levels, shift your trade to the 60 minute time frame. This is similar to anticipation.

Which one is best? There is no ‘best’ in Technical Analysis. All strategies will make money if you follow them with discipline, money management. What do readers say?