The Markets had a typical short term turnaround in the end of the last week's trading. It catches most retail participants like a rabbit in a torch light ,frozen,surprised and a sense of disbelief . Mature traders having their systems in place are able to cut their wrong positions fast , some even reverse but foremost they save their trading capital and lock in their profits and let the price action decide their decision . Such reversals emphasize the importance of a trading system , sensitivity of it , rules set for trading and discipline to follow it.
"The Secret of winning the Big game is to loose the least amount possible when one is wrong ".
1. Indicators :
The Hourly chart has moved into Overbought region and is likely to give a retrace to this recent upmove at some Resistance.
The Daily chart had given a Buy signal associated with a positive diversion of MACD. Its now trading above the Mid B.B. of 20dma at 5450 + level. The Top B.B. is near 5650 level.
The Weekly chart is also similar to Daily one but trading below the Mid B.B. at 20wma at apprx .5560 .
2. Moving Averages :
The alignment of Important Moving Averages is still Bearish but importantly the prices have closed above the 20d ema at apprx. 5425 . Immediate Resistance is at 50dma at apprx. 5540 .
3. Trendlines and Pattern :
Keep an eye on the Hourly Trendline supporting the upmove . It may support further upmove or break of it may change the short term trend.
The Daily charts have given a breakout above the Trendline .
The larger Pattern on Daily charts is of a Descending Triangle now .
The Volume Profile chart marks the imp. Volume Nodes . Broader range is 5485 - 5280 for any significant Trending move to unfold. Supports for retrace are at 5415 and 5320 . Price action at these levels should be observed for further trading.
5. Fibonacci Levels :
The Prices now may retrace the downmove since 5944 to 5195 in this upmove . The chart is marked with Imp. retrace levels.
6. Option Analysis :
The Option data now suggests a strong Support at 5400 and Resistance at 5600 level. So we are in the old range of 5400-5600 again. What catches the eye is the 130 % addition of the Puts at 5500 strike . Do they suggest an Expiry above 5500 level ?
7. FII Data :
The FII' s have turned net Buyers in cash markets since last two days . Though they still remain net negative for this Month till date.
8. Elliott Wave Analysis :
The EW suggests an upmove in the short term in the wave B of the zigzag. Please check out the details in the last post at - CLICK HERE
So corelating the above data , an educated guess to trade next week may be -
- The Short term Trend is Up above the breakout level of 5320.
- The major Resistance to upmove may come in the range of 5540 - 5570 (which has the 50dma, 20wma and Fibonacci retrace level in it ). If long ,then profit booking may be done here.
Of course this level will come only on trade above the volume node of 5485.
- The Support to the upmove will come at 5415-5425 and below at 5380 . One may reneter Longs here but with a strict s/l .
- The Targets to the upmove above 5485 are 5570 and 5650 level.
- Shorts below 5320 only now .
- No Positional Trade can be suggested in this zone for any side.
- One may manage the trades keeping 5485 as the SAR (again !!!) for this week .
As its the Expiry Week for the June series coupled with the ST Reversal , expect a volatile week ahead . Trade with caution !!!
Believe nothing just because a so called wise person said it, believe nothing because some one else believes it . Focus more on response than outcome , have in mind what your response will be if Market does that rather than caught in the wishful thinking of Market's outcome.
Alan Farley writes - "Experienced traders control Risk , inexperienced traders chase Gains" .