Expect the unexpected in whipsawing times
It has been a month of huge whipsaw like movements on the Nifty during Sept 2011, and the whipsaw has taken its toll. We enter the fresh Oct 2011 series with the Nifty right in the center of the 4850 5150 range. The Sept series opened at 5840 and immediately established a low of 4720 on the same day. Post that it has achieved a series high of 5169 before closing at 5015.
1) The Elder Ray readings - Bull Power increased from 25 to 48 Bear Power increased from -63 to -80. Indicating a tug of war between the Bulls and Bears with no one ready to blink.
2) The daily moving averages are still pointing downwards, whereas the EMAs (exponential moving averages) are flattening out. This indicates that we still could have a small Bullish uptrend within the overall downtrend, and opening any position should be done patiently.
3) The stochastics, are right in the middle of the overbought and oversold lines. This also indicates that one should wait for a fresh trend to establish, before opening a position. However, whenever whipsaw like movements happen, it is more often the contradiction that works. As the trend changes very frequently, and goes very far to the other end. This makes following the trend extremely difficult and less rewarding.
4) In the above chart, the MACD and the ADX, both are showing equal weight-age to the Bulls and the Bears, indicating that a fresh trend is yet to be established.
5) Yesterday, both the FIIs and the DIIs have been nett sellers, indicating that the late afternoon rally was just due to short covering and roll overs. It should be noted that roll overs happen when only majority of the traders are sitting on a loss.
6) Considering the above, and paying respectful attention to the dreaded whipsaw, we will wait for the Nifty to go near the range boundaries before opening any positions in the current series. Also to be noted is the fact that in such situations, tight stop losses won't work as the whipsaw can make large frantic gyrations.
a) Near 5120 we will open a short position with a SL of 5200 (on a closing basis) and a target of 4920. We will cover our shorts if the closing is above 5200. We will add to our shorts below 5000 only. Till then if we are in profit we will trail our SL to 30 points above the day's low at that moment of time.
b) Near 4910 we will look out for opening long positions with a SL of 4820 ( on a closing basis) and a target of 5150. We will add to our long positions above 5060
For today 4945 is a strong support whereas 5085 is a strong resistance area.
Happy Trading !!!
For cash market recommendations see our Daily Pre Market calls on NSE
It has been a month of huge whipsaw like movements on the Nifty during Sept 2011, and the whipsaw has taken its toll. We enter the fresh Oct 2011 series with the Nifty right in the center of the 4850 5150 range. The Sept series opened at 5840 and immediately established a low of 4720 on the same day. Post that it has achieved a series high of 5169 before closing at 5015.
1) The Elder Ray readings - Bull Power increased from 25 to 48 Bear Power increased from -63 to -80. Indicating a tug of war between the Bulls and Bears with no one ready to blink.
2) The daily moving averages are still pointing downwards, whereas the EMAs (exponential moving averages) are flattening out. This indicates that we still could have a small Bullish uptrend within the overall downtrend, and opening any position should be done patiently.
3) The stochastics, are right in the middle of the overbought and oversold lines. This also indicates that one should wait for a fresh trend to establish, before opening a position. However, whenever whipsaw like movements happen, it is more often the contradiction that works. As the trend changes very frequently, and goes very far to the other end. This makes following the trend extremely difficult and less rewarding.
4) In the above chart, the MACD and the ADX, both are showing equal weight-age to the Bulls and the Bears, indicating that a fresh trend is yet to be established.
5) Yesterday, both the FIIs and the DIIs have been nett sellers, indicating that the late afternoon rally was just due to short covering and roll overs. It should be noted that roll overs happen when only majority of the traders are sitting on a loss.
6) Considering the above, and paying respectful attention to the dreaded whipsaw, we will wait for the Nifty to go near the range boundaries before opening any positions in the current series. Also to be noted is the fact that in such situations, tight stop losses won't work as the whipsaw can make large frantic gyrations.
a) Near 5120 we will open a short position with a SL of 5200 (on a closing basis) and a target of 4920. We will cover our shorts if the closing is above 5200. We will add to our shorts below 5000 only. Till then if we are in profit we will trail our SL to 30 points above the day's low at that moment of time.
b) Near 4910 we will look out for opening long positions with a SL of 4820 ( on a closing basis) and a target of 5150. We will add to our long positions above 5060
For today 4945 is a strong support whereas 5085 is a strong resistance area.
Happy Trading !!!
For cash market recommendations see our Daily Pre Market calls on NSE
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