Market sees a break down.

After a four day consolidaion the Market finally moved out of the consolidaion, taking the interim budget as a trigger. A trigger is just a reason for the market to do what it intended to do anyway.

Always go with the trend.

So far, the short term trend was up. Now, with the Nifty moving below 2835, this trend has changed to sideways. Long positions should be closed since the Index has violated a significant support level.

Has the downtrend resumed ?

Not realy. The Nifty was inside a trading range 2700 to 2875 and this trading range probably continues wih different boundaries – 2950 to 2760.

Looking at a Scenario

The Market is moving inside a range, although the range is probably wider than the one we are tracking. The real range may well be 2500 to 3200. Maybe, the Index will move inside this larger range for months altogether, before deciding on a trending move. The next move could be down to 1800 or up to 3800. All of this is just to build possible moves for the Index.

If this is a trading range, how should I trade ?

The nice thing about a range is the fact that there are opportunities on both, the long side as well as the short side. In a few days time, most stocks will reach support areas. This will be a time to buy for small up moves. Traders may consider going short on rallies. Going short will no longer be easy enough. I suspect that the best part of the bear market is behind us. Every rally now will raise the question: is this the real ‘bull’ move ? Thus, short selling may remain rather difficult, from now on.

The Nifty

While the Nifty remains inside a trading range (2760 – 2950), the range is difficult to trade since we have alrady seen two failed moves out of it. First, the Nifty fell below 2700 to 2635 but rallied back inside the range without reaching its downside target. Now, the Index broke out above 2875, went to 2950 and has retreated back ino the range. Therefore, it seems that using oscilators to identify extreme conditions may be the more profitable. This means using tm Stoch, or RSI, CCI, Stochastics or some such method.

Have Fun!

Still up but uncertain

As the markets open on Monday (written at 6:54 PM), the technical position of the market can be defined as this:
1. The short term trend is UP. This happened when the Nifty found repeated support around 2760, then broke out of a trading range. We have seen four days of consolidation, which we have to assume is a continuation of the up move.

If nothing external disturbs the trend, the Nifty could be seeing 3075. To reach this target, the index wil have to break out of the current 4 day consolidation, giving it more steam.
The trend changes to down, if and when the Nifty trades below 2835.

So, how do I trade ? I continue to search for intra day dips to buy for day trades.

Have Fun!