As I had mentioned in my weekend post Nifty is likely to open inline with Dow’s closing on Friday and Asian cues in the morning, it just did that and the important support mentioned 4280 held its ground. Any longs now should be having their stop loss a wee below that. Much of today’s action was more concentrated on hurricane Gustav and OIL. I bet more traders today were tuned into the weather channel than CNBC! Oil as of now has retreated sharply, DOW is closed on account of Labor Day holiday, and we are yet again at our much mentioned breakout level of 4370!
A quick glance at the hourly chart below shows all the three 20/50/200 EMA’s were lost and regained during the course of the day. Price has stalled at an important resistance ready for a breakout. A complex inverse H&S! We have our HL’s in place all we need is a HH now above 4398!
The daily has a Dragonfly DOJI, and as you know that DOJI is more of a tug of war between the bulls and the bears. A Dragonfly DOJI is considered to be bullish and is more significant at bottoms. The price is nestled between the 50 and the 20 periods MA’s. A break above 4370 is likely to meet some resistance at 4390/4400 and then some serious prodding is required near 4418/20 levels. Once again I reiterate Nifty is going to frustrate as long as the ADX doesn’t show any signs of improvement, but the good part is that in the last few days Nifty has given a nice range with solid levels for both the bulls and the bears. This is in fact the play the pros love; buying supports and selling resistances! Nothing special in this play, we too can do it…the trick…Its avoiding the connection between the HEART and the BRAIN while trading. Leave your thinking BRAIN behind while trading because its work is over the day before when you sit and finish your homework for the next day.
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