This post is an objective analysis of the Points of Invalidation of the current Downtrend in different Time frames. 'Follow the Trend' should be the basic mantra of any form of trading or the trading system,which will result in the Market blessings and money following your bank account.
We know that Trend in all Time frames is down . The calls for bottom forming , prebudget rally , big % correction , important support area approaching , highly oversold markets , +ve diversions in some indicators etc are flying around . What one should do is , sit tight on the positions that are with the Trend and wait for the signs of Markets reversing direction . I will try and analyze these Points of Invalidation that will render the current Trend invalid and let one know the change approaching.
1. Volume Action:
The last few days of Volume Profile shows 5465 as an area from where the downfall in the immediate term has accelerated .So for Tmrw's trading this can be an SAR point.
The high volume node is at 5515 level in the 10d profile ,signifying it's importance in the short term ,any close above it will be a sign of reversal in the short term .
2. Price Action :
The Weekly close above 5550 level will signify a Weekly reversal and one may go long over close of this level if it happens next week.
One should wait for the price to close over the 5d high ema for the signal to go long.A bullish alignment of the 5-20 ema will be added confirmation.
Also Trading above 38.2% Fibo . level of 5700 will change the market outlook.
3. Pattern / Trendlines:
The Hourly chart should be followed to see the change in the Daily TF. One may keep following the Trendline in the Hourly chart ,the break of which will signify weakening downtrend in the Daily TF.
On the Daily chart we can see the importance of the 5750 level ,where markets have taken support and then resisted in last three months .Close above this level will signal the change in the Medium term .One may go long above it positionally for targets of 6000+ levels.
4. EW Count:
So, the Game Changer levels are: (These levels are as of today's data ,the short term data will be dynamic and has to be followed daily to keep tab)
In Short Term - Close above 5525 level (for next week only)
In Medium Term - Close above 5750 level
In Long Term - Close above the recent top of 6338 .
One may follow these levels to manage the trades in respective time frames . Part booking , following a Trailing s/l & proper Money Management will help increase the profits and curb anxiety .
For further details of Analysis and Targets , Pl check-
For Long Term - http://aar-vee.blogspot.com/2011/01/long-term-analysis.html
For Medium Term - http://aar-vee.blogspot.com/2011/01/medium-term-analysis.html
For Short Term - http://aar-vee.blogspot.com/2011/01/medium-term-analysis.html