Tuesday, January 6, 2009

Caution ahead? I really do not think so… but give it time..

I am reading a book named ‘How to make money trading with charts’ by Ashwani Gujral. He starts off by saying that generally in our markets the Amateurs do trading when the markets open, the bulls and bears fight it out during the afternoon and the professionals take positions during the trade ending hour or so. For the first time I said I will brace myself and hold till the last hour – the markets went up so sharply during that period I was just chicken sh*t out of thinking of taking any position. Almost the entire day the markets were range bound in 40 odd points of trading(Nifty) and then it decided to shoot skywards – I am sure that not many saw it coming though I was pretty sure of some gains – but this much – frankly I had not expected. Any ways as long as it ended positive – I guess not too many would be complaining. We have had a fair upswing in last few days and a breather is required – no? Atleast that is what US has done really.

On the global front the Asia was rocking really. Europe started out with a positive bias – kept declining during the session and then ended green – not much – but green. FTSE was up 0.39%, DAX up 0.22% and CAC up by 0.31%. It was US that showed trouble. Opened red – wanted to go green but could not – and finally ended red. Dow ended 0.91% down Nasdaq down 0.26% and S&P down 0.47%. Asia opening now isgetImageFromSession.php showing a mind of its own. Nikkei is trading now (0800hrs) at 1.12% green, hang Seng down in red 0.37% and Strait Times flat at 0.14% green.

Coming to the candles – we have had a sort of event yesterday that will carry us on for some time to come. 20 EMA line has almost crossed above the 50 EMA line – so I am now sure that this uptrend will basically continue in one way or the other. The Bollinger bands are as narrow – so do not take it as a breakout – just take it as a slow and steady uptrend. Volumes were fairly good. The candles too are trailing along the upper edge of the Bollinger Bands. MACD  divergence is healthy again. RSI is good and the ADX shows that the upswing is gathering strength. (gathering strength but is still weak) Slow stochastic shows that we are in overbought zone and that is alone ringing bells of cautions in the indicators that I study. TRIX my leading indicator is saying that upswing is still good though it is at one of its highest levels. – but as long as it stays there with the trend showing up.

Is it a time to buy? well it has been a time to buy since a long time but now – though I still feel the upswing of another couple of hundred points is perhaps still on the cards. The Fibonacci Retracements shows us that a little above 3200 on nifty is a reality.

Pivot data… R3 is showing us the 3200 levels… Ha!

R3 3207 against 3137 yesterday
R2 3178
R1 3150
Pivot 3103 against 3049 yesterday
S1 3074
S2 3027
S3 2999 against 2961 yesterday
Projected High Range 3126 to 3164
Projected Low Range 3099 to 3061
Fib Projected High 3152
Fib Projected Low 3035


See the markets were trading around the R1 the entire day till the time they decided to break the trend and moved sharply and swiftly above the R2 finally ending all the way up in the middle

of R2 and R3. R3 was up at 3137. With the pivot today at 3103 (near yesterday’s R2) It will be extremely interesting where we go to today.

Best of luck to everyone for today’s trading.