200 DMA: Reliable Indicator for LONG TERM Bulls/ Bear

sasi0263

Active Member
#1
Hi All,

200 DMA is very imp and Reliable Level for entry/Exit for Long term investers. For example Recently Nifty just bounced back by just touching 200 DMA level 2 days back.

If we dig the history, in Jun/July 2006 Nifty bounced back by kissing 200 DMA Level. that time Nifty was at the level of 2600. This kiss led Nifty to 4200 in Feb 2007 without any hurdle. In March 2007 Market started falling and Nifty touched 200 DMA 3 times and jumped up to 6000 levels in Jan 2008.

Further, After market fall in Jan 08, It again bounced back by touching 200 DMA at 4600 Levels in Mar/Apr 09 and reached upto 5200 levels.

Clear crossover of 200 DMA was at the end of June 08. This lead Nifty to 2200 Levels in Nov-end 08 without any hurdle.

May end 2009 was the latest 200 DMA crossover of Nifty. And we are upside till then. This is the tIme when Nifty is taking support to go up. Otherwise WE WILL HAVE DOWNTREND FOR SURE.
 

sudoku1

Well-Known Member
#4
Hi All,

200 DMA is very imp and Reliable Level for entry/Exit for Long term investers. For example Recently Nifty just bounced back by just touching 200 DMA level 2 days back.

If we dig the history, in Jun/July 2006 Nifty bounced back by kissing 200 DMA Level. that time Nifty was at the level of 2600. This kiss led Nifty to 4200 in Feb 2007 without any hurdle. In March 2007 Market started falling and Nifty touched 200 DMA 3 times and jumped up to 6000 levels in Jan 2008.

Further, After market fall in Jan 08, It again bounced back by touching 200 DMA at 4600 Levels in Mar/Apr 09 and reached upto 5200 levels.

Clear crossover of 200 DMA was at the end of June 08. This lead Nifty to 2200 Levels in Nov-end 08 without any hurdle.

May end 2009 was the latest 200 DMA crossover of Nifty. And we are upside till then. This is the tIme when Nifty is taking support to go up. Otherwise WE WILL HAVE DOWNTREND FOR SURE.
on 8/6/06.....200dma =9677> sensex close> 9295
on 9/06/06 200dma>9687 > sensex close >9810 (a whipsaw)


again on 12/06/06 200dma 9695 > sensex close >9476 (again a whipsaw)
on 16/06/06 200dma=9730> close >9884 (again a whipsaw):)
 

sasi0263

Active Member
#5
Price may touch 200 DMA more then once to jump. In between we may see whipsaw for few days but will see clear picture later. What u have mentioned is the candle bet ween 6 jun 06 to 16 jun-06. Go ahead with chat till 2009 and see..
 

rkkarnani

Well-Known Member
#6
on 8/6/06.....200dma =9677> sensex close> 9295
on 9/06/06 200dma>9687 > sensex close >9810 (a whipsaw)


again on 12/06/06 200dma 9695 > sensex close >9476 (again a whipsaw)
on 16/06/06 200dma=9730> close >9884 (again a whipsaw):)
Inspite of the above example, 200 DMA is a strong Support and one with VERY LONG term view can have his rules to trade it!!! The period you have mentioned, if you check you willfindthat though DMA was breached by price but the DMA value was rising , in fact it did not dip even by a tick on closing basis!!! So one might have exited his longs but wud not have gone short.
Moreover even if it is done mechanically than also over a loooong period one would stand to profit only.
All said , it requires steel guts to trade 200 DMA, Ratan Jain would ask for Titanium Balls to trade it!!!!:p
 

sudoku1

Well-Known Member
#7
Inspite of the above example, 200 DMA is a strong Support and one with VERY LONG term view can have his rules to trade it!!! The period you have mentioned, if you check you willfindthat though DMA was breached by price but the DMA value was rising , in fact it did not dip even by a tick on closing basis!!! So one might have exited his longs but wud not have gone short.
Moreover even if it is done mechanically than also over a loooong period one would stand to profit only.
All said , it requires steel guts to trade 200 DMA, Ratan Jain would ask for Titanium Balls to trade it!!!!:p
if one is waiting till the 200 dma reverses...he would b left out with only 30 % of the entire bull mkt rise provided he has entered @ the bottom of the bear mkt !!!!;)
 

rkkarnani

Well-Known Member
#8
if one is waiting till the 200 dma reverses...he would b left out with only 30 % of the entire bull mkt rise provided he has entered @ the bottom of the bear mkt !!!!;)
No indicator alone works in this market.... all are subject to whips....and none can give you 100% of the move!!!! One has to combine money management also to get the full benefit and increase the encashing of % of the move.

There must be negatives to trading 200 DMA but many positives too!!! Number of trades come down significantly!!!

I do not trade 200 DMA but do take guidance for my Long Term delivery stocks!!! Vaguely remember my LnT Holding, I exited around ~3780(1900 after 1:1 Bonus) in June 2006 and reentered at 1200 on electionresult gap up which i recently exited at 1520 on 21st Jan. I enter on close above 200 DMA and exit on close below 100 DMA!! Has given me good money in deliveries in a number of scripts!!!

Thanks for your views!!!
 

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