Login
Sign Up
Active traders already realize that the short term trend is up. If you are a short term trader, then most momentum methods have given a buy signal, yesterday itself. More interesting is the immediate future: How long will this trend last? Well, in the Nifty, we have minor resistance at 5020 and significant resistance around 5165. These are the two levels where the short term trend can face difficulties. There is the possibility that today may have been the top of a one half day rally. If the market consolidates tomorrow, then a move towards 5020 and higher is possible. Therefore, a buy on dips strategy remains valid until today’s low – 4906 holds. This may be considered as short term support.
Something Better
With strong rallies in the American markets, we can assume that the Nifty will have a gap open. A big gap has two possibilities: the gap will be filled, or, strong momentum will take the move forward. The 15 minute rule can be used to control your trades. If the gap is going to be filled, then price has to go lower, meaning that it will break the 15 minute low. Therefore, this low then becomes a stop-loss, a selling level as well as a support level. Given today’s SGX Nifty price, it may be wise to (a) look for a dip to the 15 minute lows for a buying on dips opportunity / (b) buy above the 15 minute high with a stop below the low.
A tale of two trades
This is tuesday morning. I am discussing yesterday, two different trades that I took. First, we have the Nifty. At 3 PM, yesterday, the 60 minute chart gave a buy signal (Nifty around 4860). Short term trend was up, supported by a rally from deeply oversold in momentum. I took the trade. I am long in the Nifty – a swing trade.
Then at 5.15 PM, I looked at Gold and Silver. I am not upbeat on Silver, so Gold is my preferred trading instrument. My 180 minute chart closes its bar at 6 PM so any signal that comes will be available at 6 PM. But, I am in front of my screen, I wanted a trade ‘NOW’. I am a fairly proficient technical trader, so I know all the tricks. I changed my trading screen to a 15 minute chart. Now, Gold was inside a trading range, which actually means that trading signals were coming quickly and often. Never trade when prices are inside a trading range. In my desire to get some action, I easily forgot this basic rule. Well, these things do not have a happy ending. I took six trades, was exhausted by the absurdity of what I was doing, then gave up at 9.30 PM. Two breakeven, three losers, one winner.
Meanwhile, the 180 minute chart did not give a buy yesterday, since the shorter trend change to up was not supported by momentum or the longer trend.
Reader experiences are welcome.