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Tuesday 26 February 2013

Nifty - 26 Feb 2013 - Volatililty to continue

Bears breach lows, then Bulls overcome highs, Nifty range & volatility expands.

As discussed yesterday, it does seem to be a volatile week ahead of us now. The Nifty opened with a positive gap of 20 points, but right into the resistance zone suggested by us, and immediately got sold off. During the entire trading session, the Nifty breached the previous day's highs and the previous day's lows twice, highlighting the underlying volatility in trade. Finally, the Nifty, after making a high of 5878 and a low of 5825, closed at 5855, with a gain of 4 points. We had 3 trades during the day, two out of which were profitable, while one hit the SL. At the end of the day, we could book a profit of 51 points.

1) The Elder Ray readings : Bull Power rises from -41 to -28 Bear Power also rises from -79 to -81 indicating that both the Bulls and Bears are putting in their effort, and thereby increasing the volatility on the Nifty. For today, the Bulls need to overcome the levels of 5895 on the Nifty to regain their lost grounds, whereas the Bears need to breach the levels of 5810 to maintain their downwards momentum.

2) The Nifty continues to close below all its key EMAs and also below its 50DMA. However, it also continues to close above its 100DMA and its 200DMA.

3) The stochastics are back in the oversold zone, confirming the bearish sentiments on the Nifty.

 


4) In the above chart, the volumes have decreased with the stagnation in the Nifty, indicating caution amongst the larger trading community. The MACD continues to be in the negative and is growing lower. The ADX is suggesting a loss of overall momentum, but is still favoring the Bears. The Parabolic SAR continues with its sell signal with a SL now of 5963.

5) Considering the above, our trading plan for the day is as under.

a) Around 5885, we will open fresh short positions with a SL of 5905 and a target of 5835. We will add to these short positions only below 5810.

b) Around 5825, we will open fresh long positions with a SL of 5810 and a target of 5865. We will add to these long positions only above 5905.

Happy Trading !!!     

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2 comments:

  1. Trading plan(b) has got triggered now. Opened fresh long position (one lot only) at 5823 with SL of 5810 and target of 5865.

    ReplyDelete
  2. SL Hit in long position at 5810. Booked loss of 13 points.

    ReplyDelete

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