5200-5250 a strong resistance.
This looks more like a "5th" wave set up when read with "macd". It could develop into a "Negative divergence trade in two days time. Presently playng a "long". Also note the "short term moving average(7hour) converging towards the long term average(35hour) and then slowly diverging and setting up what is called - "Fast rise scenario". And the market obliged.
The normal TA parameters have not changed to bearish after "OB" conditions and market did a time correction and moving higher..
12 comments:
Dear Ilango,
1. Is it possible for stoch to be 100% both in 5 and 15Ds ? Some like Grasim and ACC are exhibiting such status. The Divergence is +ve.
2. In case of an OB signal,the Divergence has to be +ve and
3. In case of an OS signal,the same has to be -ve for trade action ? Is my understanding correct? Also
4. Is it enough to check the ST divergence for Day trading?
5. What if the divergence are not as in 2 and 3 above with OB/OS status ?
Kindly advise at leisure.
Hi..Rajagopal,
1. Stochastics generally will not be 100% as the closing is generally below the 5 or 15 period range except in a rare case of continuous upper freezes.
2. When you have a "OB" signal, you start looking for -ve divergences to initiate a sell from such a "overbought" zone.
3. When you have a "OS" signal, you start looking for +ve divergences to initiate a Buy from such a "oversold" zone.
4. When the day is "OB", look for a divergence to trade downwards as it happened with Nifty @ 5148....the daily was "OB" but the hourly displayed -ve div. However, by not closing below day ema(Close), the sell was not severe.
5. Divergences are excellent to make the "biggest money" but "Jesse Livermoore" lost everything because of the "persistent divergence" taking up more time and after pushing him out of all his positions, the market fell in a massive way. That was an irregular correction which went beyond the top of the uptrend and then fell big.
To play divergences, one needs patient and need to build position in a "pyramiding" way as the confirmation starts to appear everyday.
Post Oct.08 low of 2252, there was a + divergence (which has to be seen on a "Close price" chart only as all oscillators are based on close prices.) and market gave 2 to 10 baggers. Besides 11% rule was playing big which happens once in 4-6 years.(Good Stocks available @ 11% of their peak value...Money Control site gives such statistics)
Diwali-2009 offered an excellent -ve divergence.
Jan.2008 peak was accompanied by -ve divergences.
Once you are sure of it, play options to make it big...
This strategy is on top of my trading methods and you can read about it in the link below:
http://tradeinniftyonly.blogspot.com/2009/11/divergence-trademost-potent.html
Keep such methods in your arsenal but use them only when they are ready and mature.
NIFTY MID CAP&NIFTY JUNIOR SHOWING WEAKNESS IF GLOBAL INDICES CLOSE IN -VE NIFTY WILL TAKE BEARISHNESS.
hi dear sir ilango,
sir i have one quary for nifty i have 3 nifty sell at avg. price is 5112 so now come to the point nifty recent high=5310.85 and low=4675.40 now 78.6% retrace point is @5175 so i take 5381 sl for this or create more short till 5310 and put final sl 5311 ? i think as for5310 is most importent level
regards
Dear Ilango Sir,
Good Evening, The Option Open Interest Data has something very interesting, the open interest at 5000PE. Your comments on this
Open Interest for March 2010 Date : 11/03/2010
Strike Call Chg % Put Chg %
4800 1124150 -1.35% 6805600 1.20%
4900 1757800 -1.61% 5628350 4.21%
5000 4224450 3.94% 12238650 16.74%
5100 6652850 -9.90% 6512300 19.85%
5200 5145950 -5.43% 2131800 19.12%
5300 4683200 9.40% 697700 3.91%
Sir,
Without any software and those trading through broker over phone based on this blog excel sheet how to identify that a _divergence has taken place in the overbought zone and vice versa
Thanks
Bala
Value areas:
BN- 9162-9138-9115
Nifty -5140-5130-5121.
Thank you Ilango. As you have spotted, I am trying the futures front to balance my "sit tight" attitude with "frozen trade" situation. Your advise is just fantastic - this KG student could grasp it. Now I must learn to identify the price/EMA movement required to expect -ve or +ve divergence on borderline cases with OB/OS status.
Will work on it. It is promising. Please take care of health.
hi ilango
take care.
get well soon.
god bless.
Hello Ilango and all other blogmates,
GOOD MORNING ..................
@ Ilango, Not well ? Take care.
@alpesh,
I has advised to exit shorts yesterday. Even on Wednesday, my comment was to exit if it closes above High ema and specifically told on some quiery to exit shorts.
The reason being very simple: when you see price not showing any weakness after taking shorts, do not sit with it for long time. You will then miss the current action.
Viren's VAH @ 5130 should have atleast alerted you to exit at close.
@ Bala,
Without chart..you can keep a notebook and do the calculations and even have a graph sheet like I did for 5 years before I got a computer.. :)
Hi..Sanjay,
Whenever such High OI is built in a series, market has had a good rally and that series is never visited again.
From 5000PE, now to 5100PE, this looks like market definitely not going to 5000 and may not also go to 5100(We have had a 4 days of support forming here).
So even if a correction sets in either from Monday or Tuesday, the maximum fall may be upto 5100.
A bearish trigger is established @ 5090.
Good work, Sanjay.
And Viren...
I hope readers follow your VAH, POC & VAL values and keep them in mind on those indecisive days to guide them.
Thank you all.
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