These are my personal musings. These are not in any way meant to be trading advise. To view the full chart, right click and open in a new window.
It was suggested yesterday ... “Tomorrow being a weekend, we may see support coming in around the 5900 levels, and then short covering may allow the Nifty to recover quickly. The Bank Nifty still indicates to be among the stronger sectors.” The recovery in the Index was largely contributed to by the Banking sector.
Well … the 5900 levels were not achieved but we did come 100 points near it. After today, the questions arises … How do we trade this?
I simple glance at the chart will show us that the short term price is moving down more than it is moving up. On the other hand, if we step back, we still see that the previous bottom of 6060 has not been violated. At this point in time, it is apparent that this is a short term downside move within the secular upside move.
As suggested earlier, today’s upwards retracement could be due to short covering. Thus we could anticipate one more down move. If, however, the Nifty moves higher than 6350, it would mean that the correction is over, and the Nifty has resumed its upward secular trend.
It is also true that the earnings announcements will motivate knee jerk reactions, thereby increasing intra day volatility. Therefore, it would be a good idea to work with hedging.
Trade happy after planning your trade.
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