Another volatile derivatives expiry behind us. Nifty opened firm, continuing the action from yesterday. We have managed to close in the upper range of intra day action. This rally is more a result of oversold levels than anything else. As traders we should be looking to play these short term swings. Today I have done away with the 5 minute chart and replaced it with hourly chart. The area marked with the dashed ellipse shows a small inverse head and shoulders pattern with an upside target of 4450 for starters. But the first resistance zone is 4360 and it looks strong! On the downside we need to protect 4225/4230 (failing to do so would result in some panic and bottom testing). Looking at the daily chart, we can see, all the three indicators (MACD, STOCH and RSI) suggest a buy. The price is extended from the EMA’s and need to pull back and go back to the value area (this is also the target of the inv h&S we see on hourly charts). Now the caveat; tomorrow we have our Inflation numbers. Plus with the weekend coming up traders might be not comfortable in taking longs home since we are still faced with some uncertainty regarding the fate of our government vis a vis the civilian nuclear deal. Assuming we react negatively to Inflation figures and still manage to hold 4225/30 then that would be an ideal entry for going long but I would suggest to play small and play well!
There are two times in a man's life when he should not speculate: when he can't afford it and when he can.
Mark Twain.
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