Uploaded with
ImageShack.us
Let me point out some possible fallacies. Let these just be warning signs as you test your methodology, and to test it on live price action as opposed to testing it with your live money.
It's quite obvious by this chart that Nifty has been in an uptrend for a long time, according to the 5-min. Let me say this is being tested under ideal conditions. The higher TF's were already indicating a correction of the longer term DOWN.
If I am understanding you right, you are seeking an entry once the 39 has leveled or curled up. That being the criteria, entry would have been circa 4853 near the dip to the left of the chart. If you are using the stochastics as a confluence, then it was already OB. My question would be what would you have done at this point.
Also, live price action in testing a methodology is a lot different than backtesting.
Let's say you got in at the dip, based on the 39 MA and stayed in, the stochastics notwithstanding. Then, it is evident the 39 MA will keep you in. So far, so good. Current price--5012. Up by 157 points.
Let me let you in on a sneaky little secret. Remember I told you there is always a gravitational pull back to the median with all price action (That includes all TF's, and any kind of a median indicator.) Currently the MA is at 4975. When price breaks on the other side of it (Cut-n-paste this somewhere, so you don't forget.), the MA will still be pointing up. This is because, once again, MA's measure the average of, in this case, 39 candles. When price finds its way back to the MA, it finally made it back to the average of all those candles. The recent trend was up, so the MA is still up.
Let me also emphasize, that this is an ideal situation. These are the situations that ones that sell e-books post this sort of stuff on, and show the readers on paper why the system will make you so much money. Then the reader tests hit, and they are so disappointed.