Trading Range Resistance.

In earlier posts, I have explained the nature of the trading range. When prices hit support and begin movin up, there is a sense of euphoria (“this is it!’). Soon enough, prices touch resistance, stall and begin a decline. The sentiment quickly turns to pessimism. These alternating bouts of euphoria and pessimism continue till the trading range holds prices.

My point is: the up move or the down move inside the range are just that – small price movements. The only way to determine the direction of the breakout is to actually wait for the breakout / breakdown to take place.

The Nifty moved out of a narrow trading range between 4380 and 4500. The targets for this range were 4620 on the upside which were exceeded yesterday. Now, the larger range remains with resistance at 4730 and support at 4350. A move above 4730 will tell us that the Nifty may be ready for another 400 point of gains. In the same way, a break below 4350 gives us a downside target of 3980 or so.

Markets move through a cycle of contraction and expansion. We just saw a small expansion in the Nifty over the last 2 days. We may well see a day or two of contraction, which means random . narrow range movements.

BullsEye – the Game
I am participating in this stock market show on CNBC. The idea is to maintain a portfolio of four stocks (long or short) with at least two stocks o be shuffled every day. The show started on Monday and runs for five days, ending on Friday.
In comments, Men wote: “Mr. Sudarshan, it is good to see you play the game on cnbc, all the best, I will personally be tracking YOU.”
That’s fine. But readers should understand that this is a game, and enjoy it as such.