May Year 2012 brings all your dreams come true..

How do we know overbought and oversold...?

If I want to create any setup then what is my preferences for the setups or what the route should be taken by me?

How do I understand this market?

How do I make a trading plan & execute?

First know the trending & sideways market.

There are two contexts wherein OB & OS emerges.

a) Trending periods: In uptrend, the technical oscillators reach the OB zone soon but they tend to stay there for long periods and traders often miss the big part of the move by exiting their trades the moment oscillators reach "OB" zone. Identifying a trending move is important and there are many ways to know a trending market.. Price making higher high & higher low..TT-Tech table-prices closing above DHEma while higher T/F TA too in upmode, and so on. Apply the same to downtrends too.

b) Sideways periods: During uptrend or downtrend, markets tend to pause for some time after a sustained price rise/ fall. Prices tend to move in a sideways mode in a channel which may be a horizontal type(Flat correction), in a converging/ diverging channel(Triangle) or in an upward or downward sloping channel (Zigzag). This may be identified best with a close below DHEma during uptrend or a close above DLEma during downtrend. Oscillators tend to move from one extreme to the other and once they reach OB or OS zone, they promptly reverse.

Since the markets spend most part of their time in a "Corrective mode", oscillators work well most part of the time. However, this also leads to complacency on the part of the trader and they fail to see the different acts of this oscillator once the trend emerges or resumes. Thus they either miss on the "biggest moves" or "find themselves holding hugely loss making position, unable to accept the change in time, not applying stop loss strategy.

Knowing that there are many technicals working at all time...month/ week/ Day and Hour, etc.. will help you to be prepared for the most important aspect of "Technical Analysis" which is "Trend asserts itself when it matters most which is - at the close period of month/ week/ day & Hour, etc". This is the reason why prices may behave contra to the trend most part of the hour but go back towards the trending side at the closing of the hour. Similarly for day, week and month. Intra week upmoves get fully retraced on the last day of the week. Intra month rallies are retraced towards the last part of the month. Intra settlement moves are well settled in favour of the trend at the close of the settlement.

Believe in this most important characteristic of technical analysis, the most practical one. The prices will make you most uncomfortable with their counter trend moves during the "intra period but within the permissible levels" but will go back to their trending direction when the said period (Month or week or Day or Hour) comes to a close.

If you can believe in this, and make it a part of your strategy, you'll then look at the counter trend moves as opportunities to initiate the most rewarding trades and if you are already in the trending trade, you will learn to "sit through the counter trend moves with amusement".

Remember also that some of these counter trend moves tend to be "reversals" and thus you may get stopped out of few of those trades. Some of these could be overcome, if you keenly observe the "changing dynamics of the market by observing the changing momentum of the market" using "Divergences" as well as learn to "play the counter trend moves" using:

1. Pivot trading with Support and resistances.

2. Intraday trading

3. Tech.Table reading.

Market, most often, makes its intention clear by way of certain "developing patterns" such as continuation patterns and reversal patterns. Your ability to spot them and merge them with your other studies such as classic TA, EW, Gartley patterns, Market profile, Open Interest analysis, SAR study, etc. will make you arrive at a "trading plan which has good risk-reward ratio". The next step is to identify the tools of execution:

1. Buy/ sell futures.

2. Write option.

3. Buy Option.

The degree of your comfort level with the above tools besides the type of market - trending or sideways and the time remaining in a series would decide the tool of execution.

In a trending market, option gives you unlimited profit irrespective of the time of the series. However, if the comfort level is less, writing gives easy gains provided you choose a better strike price.

In a sideways market, writing PE near the support level and writing CE near the resistance works OR simply write both CE & PE at the pivot point. Remember to take those profits once the option gets to 5 to 10 while leaving some on the table & freeing the margin money.

Armed with the most basic knowledge, arriving at trading plans based on the most objective, honest observations, executing such plans in a detached manner, you’ll gain experience slowly and steadily. This experience will turn to intuitive power which will lay the foundation for Getting Rich Slowly and Quietly.

We wish you a very Happy and Prosperous New year in which you’ll grow in all the aspects of your life and be a lighthouse for all around you.

Showing off, pride enters the distracted mind.

Some devotees like to show off. For hours they meditate, for hours they chant, for hours they repeat the name of GOD. They look down upon others who do not spend so much time meditating and chanting. Arjuna happened to be one of these. If you remember, one of Arjuna’s brothers, whose name was Bhima, was the strongest in the family. Bhima never, never prayed to any god. He used to eat and he used to fight. He was a voracious eater and at the same time a great fighter.

But Arjuna used to pray to this god and that god; he had to please all the gods on earth. Lord Shiva had to be worshipped every day. For two hours daily Arjuna used to collect hundreds of flowers and offer them to Lord Shiva one by one. Each time while offering the flowers he used to utter the name of Lord Shiva. Then pride entered.

Nifty ends the year with total red but with a 100 point JNSAR gain.

As we say "Good bye" to 2011, take few minutes to download your ledger a/c or "Bank transfer details" to ascertain the gains made as well as "the losses,if any, that were let to run instead of the profits".
Feel the money gained as well as the money lost.
A brief glance at those reports should awaken in you certain resolutions to be made and followed-up in the coming years.
If it looks good, you're on the right path. Keep your feet firmly grounded and remain focused.
If it looks disturbing, find the reasons and they are often "Overtrading...chasing prices....not managing your trades after being initiated, taking unmanageable huge positions/ risks and so on".
Have a hard look at your performances curve...If faithful, it must be upcurving..
If hopeful, it must be downsloping.
Resolve to take charge. Only you can do it for you...not me ..not anyone else.
Don't sit around praying.. Act only when you are convinced of a trade. Once executed, Manage it with faith and exit only when targets are met/ stopped out.

I'm grateful to your presence here with your sharing thoughts that keeps me motivated to stay objective and grounded.
Thank you for your kind wishes.
Wish you all a happy and prosperous New year.
1. JustNifty TA(02nd Jan)

Nifty Intraday Update-III

Nifty Intraday Update-II

Nifty Intraday Update-I

Nifty PreMarket View

Retracement for the recent fall of 162 points from 4801 to 4639 comes @ 4701(38%), 4721(50%) and 4740(61.8%). Upsides possible above 4740.

MLEma @ 4732 is a number that would be defended by Bears.

WLEma @ 4672 is a number that bulls would need to defend the least.

Nifty, downtrending, moved towards the lower

Knowing helps but doing produces results. Analysis helps but application brings you the money.
Without "faith", doing & application becomes a doubtful act and never gets to their fruitful conclusion.
And without such concluding acts, experience will not be gained. There will be few failures but such a discipline of "faithful following" keeps you in the safe zone during the most trying circumstances.
Most of the studies we know here had their direction down and staying with the direction requires tremendous amount of conviction & sitting through. In stock market, hope kills but faith delivers.
Those who believed are all winners today.
As per the criteria laid down by "Jigs" that "Close of expiry series with reasons" was given by "Parimal at 8.55AM today" as below:
I am giving my contribution based on Ichimoku charts:
Since price of Nifty has moved below all indicators such as Kizun-Sen, Chikau span, and Tenkan Sen and also price has broken down the Kumo, I expect this expiry to close at 4650.

More contributions with valid reasons were given by K7(FII selling), Jigs(Month BB), Suresh(EW but not detailed), Dinesh Rishi(JNSAR Down) and Nanjil (though he says its a fancy number, we know he follows his own studies meticulously).

Congratulations to Parimal. And a big Thank you to all participants for their enthusiastic involvement and for Jigs for his initiative.

1. JustNifty TA(30th Dec)

2. BankNifty TA(30th Dec)

Nifty Intraday Update-III

Nifty Intraday Update-II

Nifty Intraday Update-I

Nifty PreMarket View

Downward momentum picks up only on a EOD Close below Low emas.
7 Hours to go for the day to change from sideways to Down.
2 Days to go for the Week to change from sideways to Down.
2 Days to go for the month to change from Down to sideways.
Until then trade the ranges developing each day..

Nifty, having closed below DHEma, losing up-momentum but yet to gain downward-momentum.

1. JustNifty TA(29th Dec)

Nifty Intraday Update-III

Nifty Intraday Update-II

Nifty Intraday Update-I

Nifty PreMarket View

Holding the morning session's lows is minimum required for further upsides. Continued lows making should warn you of resumption of downtrend.
4675-4695 is a strong support zone for the day.
4775-4785, the strong resistance above which further upsides are possible for today & tomorrow.

If the price weakness resulting from OS & -ve div hour ends with morning weakness, two days of upove possible. If weakness persists, the OB day which has lost the momentum yesterday with a close below DHEma will turn down.

Current weakness is the result of the "rising wedge pattern". If stability returns, the same pattern may play out a "leading diagonal of "a" wave.

Nifty enters a pause mode after reaching out to 20sma.

1. JustNifty TA(28th Dec)

Nifty Intraday Update-III

Nifty Intraday Update-II

Nifty Intraday Update-I

Nifty PreMarket View

"4805"-WEma
"4816"-50% retrace
"4819-4840" earlier tops.
"4755-4759"-yesterday's intraday supports.
"4761"-today's Pivot.

Aggressive 4800PE & 4900PE writing points towards 61.8% @ 4888.

Aggressive 4800CE & 4900CE (lesser compared to PE) points to ST correction which may not be deep. 4745-55 to 4815-20 may be the range.

Nifty's rally continues keeping above Day Pivot.

1. JustNifty TA(27th Dec)

2. BankNifty TA(27th Dec)

Nifty Intraday Update-III

Nifty Intraday Update-II

Nifty Intraday Update-I

Nifty PreMarket View

Nifty has closed below DHEma but staying well above DLEma(rising).
There seem to be a pause.
"4755-4770" cluster resistance above which 4805-20sma.
"4665" continues to be the ST support.

Forgiveness, thy name is Christmas..

My dad had as much pride as anybody, I suppose, so he wouldn’t just say that we couldn’t afford one. When I mentioned it, my mother said that we weren’t going to have one this year, that we couldn’t afford one, and even if we could – it was stupid to clutter up your house with a dead tree.

I wanted a tree badly though, and I thought – in my naïve way – that if we had one, everybody would feel better. About three days before Christmas of 1949, I was out collecting for my paper route. It was fairly late – long after dark – it was snowing and very cold.

I went to the apartment building to try to catch a customer who hadn’t paid me for nearly two months – she owed me seven dollars. Much to my surprise, she was home. She invited me in and not only did she pay me, she gave me a dollar tip! It was a windfall for me – I now had eight whole dollars.

Nifty resisted at the 4755-70 cluster resistances.

Observe(in Hour chart) the "rally from 4639 to 5099" which lasted 9 days, you get some clues of existing similarities in them. That rally was correcting a larger decline from 5400 whereas the current one is correcting a smaller fall from 5099 to 4531.

If the minor correction that started from today is contained above DLEma(4645) or Week pivot(4670), an attempt towards 4800 is possible. Accordingly this rally should also terminate within 7 trading days from the 4531 lows. This is a near term bullish but medium term bearish view.

Similarly, there are other possibilities too exist which may be brought to the front if prices compel.

Going into the last week of the month, "4732"-MLEma would be keenly watched.

1. JustNifty TA(26th Dec)

2. BankNifty TA(26th Dec)

Nifty Intraday Update-III

Nifty Intraday Update-II