Trading the Dip

Today morning, I suggested that we could use oscillators to identify intra day dips and go long. I had also given a chart. I am giving below a chart with two trading setups today. Both resulted in fairly dent rallies. Traders should plan to exit once a range expansion has taken place.

[Some people have asked me if why there are ads in the blog. These are ads inserted by Google. When a reader clicks on the ads, Google pays a small amount of money to the blogger (me, in this case).]

Now for the 5 minute chart. Ask yourself the right questions: how will I enter ? Where will be my initial stop ? Where is the range expansion bar ? Today’s setup worked mainly because I was having a view that the markets were in a strong uptrend.

We do not short up trending markets

For those who still cannot watch the video, here is advice from Mustafa:

“For those who are not able to watch properly, just click on pause button after you start playing the video, and then play the video again after the whole buffering is over. This way the video can be watched uninterrupted.”

The main topic: We do not short markets in strong up trend. Therefore, markets must first tell us – “maybe I have gone too far”. The three drive pattern gives this message when the third top exceeds the trend line. That line is around 3770 approx. A swing low was marked on the chart with a horizontal line. It is 3350. I would expect a break below 3500 to be a clear sign that the bulls are going away. Till this happens, I prefer to stay on the long side. (If markets keep going up, these lows will change).

While it is psychologically easy to take a contrarian stand, the profits really come from going with the trend. The tend is UP.

How about today – Tuesday ? The US markets are roaring, going up, day after day. Traders may like to buy an intra day dip in the Nifty. Here is an example from yesterday.