Simple Trading Based on Trend and Support/Resistance Levels

[sachin_jain3]

This thread i am starting to provide some guidelines as to what levels to trade Nifty based on the current trend and support/resistance levels.

Trend: Trend is defined to be UP if the 100 DMA is trending up otherwise down.

Support / Resistance : Typical text book definition. Where the price move down after an upmove is a resistance. Where the price moves up after a down move is a resistance. I would look at daily charts only.

Trading Strategy for today
Current Trend : Down => Only go short in a downtrend.
Current Resistance: 2850.
Current Support: 2570.
Strategy: Short above 2800, keeping 2850 as stop loss. Target: 2600.

The resistance at 2850 is week because it has been tested twice already. So keep you position low. A better resistance at around 3160 is next to come where you can play will bigger position.

 

[haarry]

Is buying Nifty Future and at the money put of same expiry for day trading is good?

 

[subrata_ind]

This thread i am starting to provide some guidelines as to what levels to trade Nifty based on the current trend and support/resistance levels.

Trend: Trend is defined to be UP if the 100 DMA is trending up otherwise down.

Support / Resistance : Typical text book definition. Where the price move down after an upmove is a resistance. Where the price moves up after a down move is a resistance. I would look at daily charts only.

Trading Strategy for today
Current Trend : Down => Only go short in a downtrend.
Current Resistance: 2850.
Current Support: 2570.
Strategy: Short above 2800, keeping 2850 as stop loss. Target: 2600.

The resistance at 2850 is week because it has been tested twice already. So keep you position low. A better resistance at around 3160 is next to come where you can play will bigger position.

Hi sachin,

I s there any chance of market going down to 2400 by January 2009

Subrata

 

[sachin_jain3]

That last strategy to short Nifty didnt work because the stop loss was hit. We lost anywhere between 1 to 50 points in the trade. As told in the last thread the resistance at 2850 was week. I could also look it from the point of view of not being able to identify the resistance correctly. If only I had said the resistance is at 2900 the trade could have worked at least for yesterday, but the risk reward would have gone worse. Maybe in these markets its always better to give more buffer to the resistance / support levels.

Trading Strategy for today
Current Trend : Down => Only go short in a downtrend.
Current Resistance: 3150-3250 levels.
Current Support: 2570.
Strategy: Short above 3100, keeping 3250 as stop loss. Target: 2600.

The resistance at 3150-3250 is strong. You can play will bigger position. You will need to be patient for these levels to be reached.

Trading Strategy 2 for today
Current Trend : Down => Only go short in a downtrend.
Current Resistance: 2900 levels.
Current Support: 2570.
Strategy: Short above 2800, keeping 2900 as stop loss. Target: 2600.

The resistance at 2900 is week. You should only play with small position. risk reward ratio is bad. I wont play this position.

 

[sachin_jain3]

Is buying Nifty Future and at the money put of same expiry for day trading is good?

dont know, i am not doing day trading.

 

[sachin_jain3]

Hi sachin,

I s there any chance of market going down to 2400 by January 2009

Subrata

dont know, I cannot predict the market. Only propose how to trade the markets based on the current situation.

 

[sachin_jain3]

no change in strategy. It remains the same. Just to clarify what i will be posting are multi-day trading strategy and not intraday. These are based on simple logical understanding of the current market situation. Trade wisely not emotionally...

Sachin

 

[sachin_jain3]

The stategy 2 identified above would have failed with a loss anywhere between 1 to 100 points on Nifty. You can see some good reason why that resistance failed to hold on: If the market trades in the resistance identified by you for long then either you haven't idenfied the resistance correctly or the resistance is getting beaten and will be taken over. Similarly if the resistance is visited quite often then the resistance will be taken over most likely.

No change in strategy 1. Wait patiently for the Nifty to reach 3100. Remember if that's the resistance it will reach there, but wont trade there for long. Get all you orders lined up, have your orders placed as soon as the market opens.

 

[sachin_jain3]

sit tight, the opportunity is coming. dont short before 3100 is hit. Keep your orders placed.

 

[sudoku1]

I s there any chance of market going down to 2400 by January 2009

sure........if the sensex is unable 2 close abv 12175...