Strong global weakness did not give any reason for the NIFTY to look back from its bull run. Though opened lower with a lower low against the previous day, NIFTY managed to give a strong pullback and even managed to take of highs.
Most of the front line stocks managed to give a strong recovery from previous day's weakness. BPCL was the star of the day with a 4.33% gain on its price followed closely by IDFC with a close to 4% gains. Barring 7 stocks or 14% of the index stocks which closed negative, all the other stocks of the component list have closed positive. The interesting part of today's rally was the above 1% gains registered by 24 stocks in the index list which is a whopping 48%. These gains neatly coincides with the just above 1% gain on the Index too.
The value zone on the daily chart continues its bullish journey resting at 5266-5207. But, an issue of concern here is the recovery, these types of one day reversals add more strength to range bound movements. Now the question looms largely as to whether the bullishness will continue with the same vigor or would fall short & calm down into a neutral trend.
MACD line and histogram show high strength, histogram maintaining above zero is a strong sign to the prevailing bullishness. While this is the scenario on the daily, the hourly charts have got struck into a rampant onslaught of the neutral trend.
We have so far had 5 whipsaw trades and most of it getting reversed at the range highs. Overnight short trade got covered with a loss of 12 points and reversed into a long trade. The open long trade has closed positive. As we write we find Europe succumbing to bear pressure, though opened strong, which gave the most required fillip to turn our index hugely positive towards close.
The tight flow of prices has made the NIFTY chart go into a non-trend. But, the rising averages even have the potential to gain into a new bullish trend provided the price gains further. Next clues are awaited from the US market closing. Though we found today that the underlying global cues do not affect our markets, still the opening is decided by the global peers.
The value zone on the hourly chart is at 5293-5289, close to the closing price. As the present markets go into non-trend often with more number of whipsaw trades and only few good trends. We need to capture the most from the trends and keep our position lesser in the non-trending zone. Based on this we urge traders who follow our trading calls on the NIFTY to load their positions by trading multiple lots. The entries will be in stages, we trade one lot on the first trigger and then as the market keeps moving in the side of the trade keep adding more up to 4 lots maximum.
Traders with low capital base cannot trade this method as we need a minimum of 2.50 lakhs to trade one unit (4 lots) on NIFTY. Traders wanting to trade on the Mini NIFTY can do so if their trading capital is 1 lakh. Based on this the staged entries for the present long trade is to add 2nd lot at 5328, 3rd lot at 5341 and the forth lot at 5354. Along with the entries stop too keeps moving in the direction of the trade.
Once the 2nd lot is filled our stop moves to 5276, on the 3rd lot getting filled the stop moves to 5289 and on the final lot the stop will be at 5302.
While this method is a very advantageous method for trend trading, we strictly ask the traders following the calls here to adhere to risk management. Once failed there and you give more leverage, whipsaw trades will put you out of the market. Any doubts on this trading methodology can be discussed on the thread in a ongoing basis.
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