NIFTY trading using Gaps and Patterns - Near term outlook

The classical basics of technical analysis concepts still do add value if one is grounded and have discipline in their investments or trading.

The NIFTY took a support at 5100 - 5150 odd levels and bounced from intraday lows and closed @ 5285. From 5118 CNX NIFTY has moved to 6142 odd levels. In the process perfectly 3 gaps occurred: A Breakaway Gap (BG), Runaway Gap (RG) and finally an Exhaustion Gap (EG), which occurred on the day which US federal reserve delayed tapering of Quantitative easing (QE) on 19th September 2013 by reaching above 6100 which was also an inverted H & S  pattern targets as shown in the chart below. 

The day after 20th September 2013 the gap was closed confirming an Exhaustion gap. Another big event triggered the end of the rally as Reserve Bank of India (RBI) increasing the repo rates.

                                                                NIFTY Daily Chart

Now NIFTY is on the verge of a breakdown of Head an shoulders pattern below 5800 and the chart structure looks bleak and bearish for near term with lower targets of 5740 below 5688 - 5600 - 5500.

Trade objectively and wisely with the consideration of own risk with amid volatility. The strategy would be to wait patiently for the right opportunity to unfold to probable profitable trade setups.

Raju V Angadi

Equity Research Analyst

 To know more about probable counts analysis on NIFTY, BANK NIFTY and CNX IT along with 5 stocks for the month check out our newsletters and advisory services contact us back on rvangadi@googlemail.com or swing research5@gmail.com or +91 78291 55900

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To swing your fortune higher join us and be ahead to track market turns ....

Disclaimer: This is just an view based on the research of individual for educational purpose. So kindly trade along with the consultation of your financial adviser, market trends, price action and own risk appetite considered while investing or trading in stock markets.

Trading Plan for Professional Traders

Money Management - Trading capital - 1 Crore (example) 

Instruments - Equity derivatives 70 % / Commodity 30% ( 0 in equity .. don't have dmat account)

Systems in each - Trend following 50 % / View Based 20% / Options 20%

Exposure maximum - 3 Times (not as per span margin of exchanges)

trend following tools - Simple Price action / Moving Average / Renko Charts
View based - candlestick (price) / Fibonacci (sup /resis), Rsi (momentum) / Bollinger (volatility).
Options tools - RSI / BB / ADX (no open interest / no put call ratio / no greeks )
Max Drawdown on whole capital - 15% .. once hit then exit all positions market ..
Types of Stop loss - Initial Stop / Trailing Stop and Time Stop
Per Trade stop / Per instrument stop ..
Journal Each Trade with detailed reasons ..
Review of journal every 20 trades..
trading break after every 3 months mandatory ..
break after huge winning streak - to avoid overconfidence
break after huge losing streak - to get confidence ..

Approach - Top down -
on weekend - scan all sectors ... then all stocks from derivatives - make list of strong stocks for buy and list of weak stocks for sell -
filter them to max 5 in each ..
trade max 6 positions at any point of time ...
By,
Vishal malkan

The summary of this is trading plan is to educate professional traders which most of them misinterpret in the process making their life miserable and complicate due to lack of discipline, money management and trade management techniques and finally lose even after rigorous research and analysis.
- Trade with a simple plan
These is just a trading plan in general. So one can articulate his/her own plan based on their mentality and suitability accordingly. To successfully trade in any instruments.

- Set realistic goals

- know how much max. you are entitled to loose before entering the trade (Risk - Reward)

- Diversify your investments

- Patience

- preservation of your capital

- Doing through analysis and knowing what you are doing 

- Never over size your positions - position seizing 

- Application of simple tools either techincals or fundamentals

- Assessment/Review of trades/investments 

Trade objectively and wisely with the consideration of own risk with amid volatility. The strategy would be to wait patiently for the right opportunity to unfold to probable profitable trade setups.

Raju V Angadi

Equity Research Analyst

 To learn more about investing/trading in financial markets contact us back on rvangadi@googlemail.com or swing.research5@gmail.com or +91 78291 55900 

Disclaimer: This is just an view based on the research of individual for educational purpose. So kindly trade along with the consultation of your financial adviser, market trends, price action and own risk appetite considered while investing or trading in stock markets.

NIFTY outlook for near term

NIFTY has rallied on the verge of short covering and some positive measures new RBI governor from the lows of 5118 - 5900 odd levels. The Index has rallied more than 750 points in 9 trading sessions. 

Nifty 76.4% retracement of the fall from 6093 - 5118 is around 5860 - 65 which can act as immediate resistance for the index now. As there is not much positive triggers to boost the rally further . Today although index has rallied around 220 points on the ease of tensions in Syria choppiness can be seen in near term. 

                                                                  NIFTY Daily chart

Is there more steam left in the rally? The market is anticipated turn choppy from current levels. So short term traders in NIFTY those of who have missed the rally its advised to avoid fresh long at current levels as risk/reward is not favorable. One is also advised to pick individual stocks on dips. Avoid public sector banking and pharma sectors.

 The long traders are advised to book part profits around current levels and revise stop loss of of 5750 above 5865 on closing basis consistently can lead to 5980 - 6000 above - 6080. The positional short traders can initiate short positions from current levels around 5880 - 5900 up to 5950 with stop loss of 6025 for targets of 5730 - 5610.  

Trade objectively and wisely with the consideration of own risk with amid volatility. The strategy would be to wait patiently for the right opportunity to unfold to probable profitable trade setups.

Raju V Angadi

Equity Research Analyst

 To know more about probable counts contact us back on rvangadi@googlemail.com or swing.research5@gmail.com or +91 78291 55900

Disclaimer: This is just an view based on the research of individual for educational purpose. So kindly trade along with the consultation of your financial adviser, market trends, price action and own risk appetite considered while investing or trading in stock markets.