Nifty Analysis for 20 Sep 06

These are my personal musings. These are not in any way meant to be trading advise. The technical problem about the charts still does not seem to be resolved. The chart ... therefore ... is uploaded here.

http://img291.imageshack.us/my.php?image=200906fibretraceandprojos6.png]

There is one thing which I abhor saying is “I told you so”. Trading is only a matter of planning a trade and then trading that plan. Yesterday, a trading plan was presented, suggesting that long positions could be initiated, if the hourly Nifty chart showed a higher top and higher bottom formation.

Today, the Nifty gave enough opportunity for going long. The first hourly candle engulfed yesterday's black candle body. The second was enclosed between the high and the low of the first, with a long lower shadow. The third again made a higher top and bottom.

What more does a trader need to go long?

We have seen some short term bears being trapped at the breakout of the H&S trendline. Some longer term bears would still be waiting for higher stop. On an extreme short term basis, the Nifty has made a lower swing bottom yesterday, and has not as yet made a higher swing top today. Technically, this should still be termed as a downside correction. However, a break above yesterday’s high could allow the Nifty make another consolidation pattern, like an expanding triangle.

Whatever the direction the market takes, one thing is sure. In volatile times likes this, the premiums of options tend to inflate. Therefore, selling options could turn out quite profitable, whatever direction we want to adopt.