Retracement strategy, a must for traders.

 Trading strategy that works wonders besides the supports & Resistance is "Retracement strategy":

The strategy that has worked consistently well with low risk-high reward ratio is:

"Initiating a trade at 50%-61.8% retrace with 80% as SL".

Understand its workings.

A trade is not complete once an opportunity is spotted & it is initiated.

A trade needs managing, monitoring.

a. After a trade is initiated at the key retrace point, you keep SL around 80%.

b. Once the prices start to move from your trading point generating profits, you monitor
the "key retrace of that rise, if up move OR the key retrace of that fall, if down move" and

trail your position.

This important part helps you "lock-in the profits as well as points to your new exit points in case of adverse reversals".

c. You manage your trade by part booking and holding the rest with the trailing number that keeps changing based on the price advances or declines.

Follow prices using HH & HL or LH & LL. Do not look for perfections.
Trendline helps to identify end of a move so that you can choose a "retracement".
Ideal is 61.8%; but 50%-61.8% is the zone; 80% is the SL

Do these above and see how your trading results improve substantially during every month.

Nifty, staying below the critical 80%, moves lower with weekly trend asserting but closes above WEma...

Nifty, on completing an abc @ 6358, started the next fall..

Nifty Pre-Market View.

5-Waves got completed @ 6142.
Did we know for sure? No.
Then, how do you make your trading plans at such a juncture?
We spotted a 5 sub-waves in the fall from 6142 to 6089 at Friday's open.
It could only be either a (iv)th wave of the last rise from 5805.
OR
The start of a correction for the entire 5 wave rise from 5119 to 6142/ Reversal.
In both cases, the immediate direction is "Down".
So what does one do?
"Sell @ retrace of 50%-61.8% with a SL above 80%", the best trading strategy for traders I strongly recommend and that translated into as below:
"Sell @ retrace of 6116-22 with a SL above 6131".
And Prices started to fall on retracing upto 6131 on RBI announcements.
That still kept both the options open.
If (iv)th wave correction, then a=c comes @ 6142-6089(53); 6131-53=6078 as (iv)th target.
Decisive break of 6078 would confirm a larger correction for the entire rise from 5119-6142.
And Market obliged with a quick, decisive break.
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Similar dilemma today:
Whether 5 waves done from 6142 to 5933 or not?
Make your plans for the day and Keep it as simple & objective as possible.
Remember whenever market does 1,2,(1),(2),(i),(ii) OR (iii),(iv),(3),(4),3,4, it calls for extreme patience & alertness.
We outlined on Friday:
1. It is possible that a 5 wave got completed at a truncated 5938.75 at 2.00PM.
In that case an "abc" bounce is likely.
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"abc" could continue towards 6032-55; Gets negated above 6091.
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2. If we consider it as 3 wave fall, flat corrections would trade in a broader range of 5900 to 6150.
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Above 6150, break out; Below 5900, Flat gets negated.
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3. The 4th wave of the fall from 6142 is still continuing...
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Above "6030", we would negate this view.
September 20, 2013 at 3:23 PM
If 4th started from 5933 as a flat correction:
 4.a=5933-6016
4.b=6016-5939
4.c= normally equals a; hence-5939+83=6022.
I applied a filter of MHEma(6029). Such excesses happen.
Now if it opens above 6033 on Monday, 4th is negated.
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EW usage for trading will be highly effective ONLY if you learn to identify Forms of waves.
(Shapes each wave is likely to take. Only more exposure would make it possible).
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Nifty does the 80% retrace after the 5 dn and does another "baby-5".

The conservative trades are based on "my perception" of Elliott wave, classic Technical analysis studies. I could go wrong though I try to maintain objectivity in my observations.
There will be contradicting remarks, for eg: FII data & low VIX V/s Technical indications but I present them as I perceive them objectively. Whatever you choose at that moment, you must manage your trades with the most minimal SL.
Pre-market table shows:
Conservative trade: (I have briefed about it above);
Aggressive trade: It is meant for "intraday traders" and it could be combined into your conservative trades when at extreme readings of overbought and oversold conditions.
JNSAR trade: The mechanical Stop And Reverse Method(SAR); it could be kept simple with small filters applied at appropriate junctions; Part-booking & re-entering using aggressive trading ranges or other criteria listed in Pre-Market table.
Choose your trades intelligently, remembering the reasons for which the trade is taken and manage them accordingly and thus keeping your thought process simple.
My presence and remarks should calm you & clear your doubts to carry on with your trades and when you find them conflicting with your perception, leave them aside as I could be wrong...as I'm too human, prone to errors but have been improving over the years.
Conflicts, complexities arise when you get too close to the market...hour, 30 min, 5 min but they are fairly simple in week & Day combination. Use the "close proximity of the market- Intraday" for bettering your entry & exits. But if the result of such "manouevring  intraday" is "losses", you must seek to trade only those "large signals coming from Week & Day T/F."
Get Rich Slowly & Quietly.

Nifty resisted @ 80% of last fall @ 5939.

Nifty Pre-Market View.

"5706" is 0.618 times of (a)-5725.
"5710" is 80% retrace for 5725 to 5651 fall.
(a)=(c) target of 5739 comes into play only above 5706-10.
The slow rise suggests of a corrective bounce to adjust the oversold hour & Day TA.
Hence, any price rise into the zone of 5706 to 5739 is a tricky one. The quality of the rise needs to be keenly watched for weakness.
61.8% & 80% strategy comes in quite handy at such situations.

Nifty Pre-Market View.

Correction is on....known once the resistances have held.
When the correction would end..??..
today in the morning session or would drag into Monday?
a perfect day for the week's downtrend to assert with Overbought Day/ Hour.
Below 5225-Day pivot, it is weak & gets weaker below 5189...bearish below 5160.
Bulls reversal only above 5231 & 5240 or above the 80% retrace of the fall from 5246.
Is it correcting the last rise from 5154-5246 or the 5033-5246.
"5172" holds the key...80% & WEma.
"5189" is the first support-61.8% of 5154-5246 retrace & 34 Hrsma.

Nifty Pre-Market View.

Waquar asked: Can you please post a write-up as how we could have traded today(17th May, Thursday):


How: As per Pre-market view, it was a buy above previous day's high @ 4882 and it moved into the resistance zone of 4910-30. Since the fall from 5125, the bounces have been in the range of 69 to 86. Hence, a potential resistances would be 4906-4923. This is  "the best" quantitative analysis for selling into rises in downtrend and buying into declines in uptrend. And there were many resistances ahead @ 4925(Dema) 4930(80% of last fall). Being below most emas, & having moved up nearly 90 points from the lows of 4837, it, first, fell to 4910.40 and bounced off to 4919.30 @ 11.10AM. And when it broke 4910 again, it was a good sell for retracements towards 4859-Day pivot & 4854(80% of 4837 to 4922).

This break of 4854(80% mark) again warns you of more downsides...more new lows.
Based on previous day's price action, you could plan the 1st session's trade and the rest of the day is mostly guess work. Hence, make the initial trades based on sound study.

Now for today: With weak global cues, we wonder whether a selling points are possible at the open. Break of 4855, is a sell for a min. targets of 4800-10 and more(4750-70). Today could be the "deep cut"..There is a trending move within a channel as shown in the chart below. Longs, for intraday only, possible whenever Nifty reaches the bottom & shows signs of reversal with a move past previous hour's high. More strength would be possible only when it breaches the middle(red) line to target the upper line.
"Shriram" sensed & voiced of the flat correction towards close after the fall from 4922 to 4851 yesterday which is "i" & "ii" done and "iiird" to start today....a "iv"th would be a selling ops. And what "Shriram" says about EW....still not believing...You'll believe as long as you discriminate only the "obvious ones". Not all life's mysteries are known to us. We, mortals, should be happy knowing this much... JaiShriRam..!!

Nifty PreMarket View

Nifty reversing from 5380 resistance zone has 3 scenarios:
1. If 5136 is a new uptrend starting point, then the correction for this rise to 5379 should limit itself to 5229(61.82%), preferably @ 5248-55DEma.

I failed to add 80% for invalidation which comes to 5185 and Nifty made a low of 5191 only-1st scenario still playing out. It seems CT is not in play but a simple "abc" ended @ 5136. To prove it, Nifty need to move past 5341 today.

I, often, advances JNSAR and did that through the intraday update charts to 5274 yesterday and even suggested to one of our readers too. If one has taken JNSAR trade @ 5274, there would have been no whipsaws and the long remains. Despite all this, possibly due to excessive interaction, I failed to stick to this simple act and stated "JNSAR is down as it is closing below 5281", instead of "it is closing above 5274" as I usually do. CT acted in my mind and failed to take into a/c other TA positioning. The 3.30PM close made the "midpoint crisis" to resolve to upsides despite a "not so firm close" which I generally look for. It is plain distraction and lack of application to objectivity.

R2 is WEma-5315. R3 is 5340 (80% confirmation for larger reversal is 5341). There could be some resistances around here & minor pull backs are possible. If, on the contrary, Nifty climbs up steadily based on the heavy build up in 5300PE, there may not be much dips initially. A breach of 5341 is the major event to look for and the EOD close above 5315.