Thursday, February 24, 2011

Break-Down



Yet another range break on the downside. It was expected that Nifty may trade in the 5400-5600 range till expiry today ,it did trade in the range till yesterday but gave a good breakout trade below 5400 today.
 


1. FII's were seller on all days of this Week's trading (i/c today) .It was an indicator that the range may break on the downside.

2. An Inverted H&S pattern was sighted on Monday . The break of stop level was also an indicator of the things to come.One should remember that such reversal patterns should be traded with strict s/l and they will give voilent trade on opposite side when pattern fails. Some patterns that are too good to be true , are generally that way.


3. Corrections as this of zigzag nature with high volatility can ideally be traded keeping a single Price Level as SAR and shutting out all the noise. 5415 was mentioned as one such SAR in the last post, which more than obliged today.

4. The optimistic Bulls were once again decimated similar to the Jan. series closing .  Also the break of 5400 levels was similar to the first week of Feb. where it gave 200 points in a flash trade.

5. Maximum pain came to 5400 put writers who normally are not touched on the last trading day with near 1cr in Open Interest. but selling in Volume Profile of this week's trading at each higher level indicated Pain below 5470 level .

6. Now the followup action of this break has to be seen carefully ,was it the final capitulation before the Budget ? or are we going down to 5000 levels. The chart below will show us the Way .

2 comments:

FIRE said...

AAR VEE,

The last chart is a simple beauty! It can be the most insightful chart in this scenario.

AAR VEE said...

Ya Fire ,True.
It may guide us for the short term probabilities.
do u sight any of ur 'gartley's' now??

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