Nifty has come up too far too fast. A correction in the offing ?
As discussed in our last post, the Nifty successfully closed the gap between 5220 and 5320 and traded well above those values to close at 5361 before showing a high of 5400. While doing so, it has now come up too far too fast. Not only that, the same gap which was left in the downward journey, is still left open in the upward journey.
1) The Elder Ray readings : Bull Power rises from +131 to +272. Bear Power reduces from +107 to +195. Indicating that the Bulls are in control and that the Bears are now looking miserable. The Bull phase can continue for a couple of trading sessions.
2) The EMAs are now pointing almost vertical indicating almost no scope for a further increase in rate of growth in the Nifty. This can also be taken as a warning signal for a slowdown in the upward movement. The 100 and 200 DMAs are still pointing downwards.
3) The stochastics are still in the overbought zone, and indicate a cooling off in the Nifty just round the corner.
4) In the above chart, the Nifty has broken through the upper Bollinger Band, indicating a reversal is in the offing. The ADX is indicating a up-move that will become unsustainable if it continues to grow with the current speed. The volumes have increased.
5) Looking at the above considerations, we have devised our trading plan for the day as under.
a) Around 5335, we will open fresh long positions with a SL of 5320 and a target of 5400. We will add to these long positions above 5430 only.
b) Around 5410, we will open fresh short positions with a SL of 5425 and a target of 5320. We will add to these short positions only below 5300.
c) We will wait patiently for our start prices to arrive and would avoid trading the Nifty till then.
Happy Trading !!!
For cash market recommendations see our Daily Pre Market calls on NSE
As discussed in our last post, the Nifty successfully closed the gap between 5220 and 5320 and traded well above those values to close at 5361 before showing a high of 5400. While doing so, it has now come up too far too fast. Not only that, the same gap which was left in the downward journey, is still left open in the upward journey.
1) The Elder Ray readings : Bull Power rises from +131 to +272. Bear Power reduces from +107 to +195. Indicating that the Bulls are in control and that the Bears are now looking miserable. The Bull phase can continue for a couple of trading sessions.
2) The EMAs are now pointing almost vertical indicating almost no scope for a further increase in rate of growth in the Nifty. This can also be taken as a warning signal for a slowdown in the upward movement. The 100 and 200 DMAs are still pointing downwards.
3) The stochastics are still in the overbought zone, and indicate a cooling off in the Nifty just round the corner.
4) In the above chart, the Nifty has broken through the upper Bollinger Band, indicating a reversal is in the offing. The ADX is indicating a up-move that will become unsustainable if it continues to grow with the current speed. The volumes have increased.
5) Looking at the above considerations, we have devised our trading plan for the day as under.
a) Around 5335, we will open fresh long positions with a SL of 5320 and a target of 5400. We will add to these long positions above 5430 only.
b) Around 5410, we will open fresh short positions with a SL of 5425 and a target of 5320. We will add to these short positions only below 5300.
c) We will wait patiently for our start prices to arrive and would avoid trading the Nifty till then.
Happy Trading !!!
For cash market recommendations see our Daily Pre Market calls on NSE
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