Will Monday see a gap up?

Two different news items could influence our markets on Monday morning. First, the prospect of QE3 in the USA which sent U.S, equities and Gold higher on Friday. Second, an apparent resolution of Anna’s fast, which can reduce political heat, at least for some time. Both news items should be positive for the markets. Together with the news is sustained selling in the Indian markets and it is quite possible that sellers may now pause and wait for a few days.

Short term traders should manage their trades, have a plan for gaps against their position, as well as gaps in favor. If a trader does not have a position, then what will be the approach towards trading for the day? While going long above the first 15 minute high is a setup, we should remember that the short term trend is down, therefore, any buy signal should be mainly for intraday. Intermediate position traders are likely to be short with stops that should not be affected by Monday’s rally.