HOW WE MAKE MISTAKES WHILE TRADING

Even though our trading system is giving good result, we added one more indicator last month and back tested, the result was even though profit remained almost same, number of trades decreased. We thought it is better to add this indicator so as to reduce number of trades, which proved wrong since if we don't added   this indicator we have exited our buy (long) position 200 points earlier and also would have taken short (sell) position 200 points earlier i.e. unnecessary loss of 400 points, so once again when time permits we will analyze effect of this indicator and if necessary we will remove that indicator from our system.

CONCLUSION :- Don't try to become smart than MR. MARKET, MR. MARKET is always right, try to identify your mistake!

In performance sheet we are not changing trades taken (last and present), just in cell near where total profits/ loss is shown also show total profit/ loss without this indicator. 

FAILED ASCENDING TRIANGLE

As mentioned in yesterday's post the making of ascending triangle failed, since instead of breakout today on hourly chart at 10 AM it broken down the support line and what a great fall after that.

That is why trading is called as game of probability i.e. you should always think of other possibility also and ready to take the opportunity.
NOTE :- These post's are for informative purpose for those who are trying to learn technical analysis and also to refresh our knowledge.
 At present according to our improved strategy we are still in buy (long) position.

CAUTION : LARGER TIME FRAME IS STILL DOWN 
DISCLAIMER: This Blog is meant for sharing my trading ideas only and no calls to be taken as trading recommendation. Visitors please do your own research or consult your advisers for safe trading.

? ASCENDING TRIANGLE MAKING ON HOURLY CHART

As shown in above chart right now there is ascending triangle making in progress on hourly chart. If the overhead resistance which is at 5170 is taken out, and it also goes above 5230 which is the lower border of gap (5330-5230) created on daily chart on 5/8/11, it will try to fill the gap i.e. will reach upper border of gap.
     
         The target for ascending triangle breakout will be5620 i.e. 5170-4720 =450 points, hence 5170 +450= 5620.

Also as in above chart 50EMA is approaching 200EMA on hourly chart. If 50EMA crosses above 200EMA which is known as GOLDEN CROSS, our dear nifty will become bullish in short time frame.

CAUTION : LARGER TIME FRAME IS STILL DOWN 
DISCLAIMER: This Blog is meant for sharing my trading ideas only and no calls to be taken as trading recommendation. Visitors please do your own research or consult your advisers for safe trading.

IS PULLBACK RALLY OVER?

Looking to Friday's fall the question comes to mind is that is pullback rally over?


REMEMBER, IN DOWNTREND/ BEAR MARKET RALLIES GET SOLD AT RESISTANCES. 

So, which are the resistances.

1) Breakdown level from descending triangle. Which is at 5170-5200 level. See the chart above you can realize that how prices got resisted at breakdown level last week.

2) Second resistance level is at gap area ( 5230-5330) created because of gap down opening on 5/8/2011, as shown in chart below.

3) 38.2% retracement (5095), 50% retracement (5210), 61.8% retracement (5330) of recent downfall as shown in the chart below may act as resistances.

4) The down-trending line shown in chart 1 which is approximately at 5550 level.

5) At last but not least ( which will be important resistance line) is 200 SMA on daily chart, which will act as wall of resistance. REMEMBER, BEAR MARKET LIVES BELOW 200 SMA. 
200 SMA on daily chart is right now at 5560 level.

So these are various resistances, where rallies will likely get sold.

At the same time if you see the weekly cart given above, last two weeks formed higher high and higher low, so in short term last week's low ( at 4943), 200 week s.m.a. ( approximately at 4830), and recent major low ( 4720) formed on 26/8/11, will try to give support.

CONCLUSION :- IN COMING DAYS IT WILL TRY TO CONSOLIDATE BETWEEN 4700-5200 RANGE BEFORE TAKING ANY DECISIVE MOVE. IT WILL TRY TO GET CLUE FROM R.B.I. CREDIT POLICY WHICH IS DUE ON COMING FRIDAY 16/9/2011.

DISCLAIMER: This Blog is meant for sharing my trading ideas only and no calls to be taken as trading recommendation. Visitors please do your own research or consult your advisers for safe trading.

NIFTY FIFTY

WEEKLY

Looks like intermediate term bottom is formed at 4720.

POSITIVE DIVERGENCE

The positive divergence (i.e. price making lower low while indicator making higher low) at the end of previous week (i.e. on 26/8/11) gave this whooping rally of 300-350 points in just 3 trading sessions on last week. REMEMBER, BEAR MARKET RALLIES ARE SHARP IN NATURE!

If the Friday's high (5113.7) is taken out then it will retest 5200 and try to fill upper gap 5230-5325, at the same time our trading system which is based on hourly time frame given sell signal on Friday so it looks like it will try to test 4800-4850 level once again.

So unless 5115 is not taken out upside is limited, at the same time recent low (4720) is not taken out downside is also limited. In short it will try to consolidate in next few days to weeks before taking any further direction.

Looking at Friday's close of European/ American market and today,s price at Asian market and sgx  nifty it looks like we will open at least 40-50 point gap down which is line with the sell given by our trading system on Friday.   

DISCLAIMER: This Blog is meant for sharing my trading ideas only and no calls to be taken as trading recommendation. Visitors please do your own research or consult your advisers for safe trading.