Yesterday only I had mentioned that we won’t just walk across with ease past 200 DMA and behold we just cut through it, like a knife cuts through butter! (So much for my analysis, but then this is what market is all about, it tends to surprise you when you least expect it to do so and one must accept in all humility when one is wrong).
Anyway speaking of today’s action we started off on a flattish note and showed some signs of nervousness while waiting for the RBI policy meet to end at 12 p.m. I feel that the pros did have some inclination of the outcome of the meet, before it was announced to the public. The MACD gave a buy signal at 11:20 a.m. After that we made two smaller higher highs and higher lows (as if someone was taking their mark before the start of the race!!! And exactly at 12 p.m. it was Reddy Steady Go!). This was nice day to trade with momentum on our side and every pullback (to the DMA) giving a chance to get in or add to you existing position. If you notice that MACD did give a sell signal well in advance at about 1:35 p.m. but still we soared. This again is an important reminder to all the students of Technical Analysis that any sell signal in indicators and oscillators should be confirmed by Price Action. For Intraday players’ time to book profits was when we broke the trend line and also the MA.
Taking a peek into the daily chart we see we have closed above the 200 DMA which in all probabilities should be tested to make it a stronger support in the event of more forceful move to the upside. The upward rising channel suggests a move up till 5400 where it converges with an overhead resistance line. Similarly 50 DMA and the confluence of three trend lines at approx 4950 provide a logical support. We have another trigger left the FED. They end up with their meet tomorrow. Since we are closed on Thursday we might react to those triggers on Friday!
"It's choice - not chance - that determines your destiny."
Jean Nidetch
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