I am not able to update the blog frequently as I have my primary business (flowers) to take care of. Besides planning to join my kids on family vacation. My last post was about the inverse H&S and hinted will the volatility mess it up!!! It seems volatility is indeed messing things up maybe because on the daily we are trapped between the 200 DEMA (below) and the 20/50 DEMA combine (above).
Anyway below is the Nifty spot hourly chart, which now looks like a clear bearish H&S!!! Yeah, and this comes into play once we make a decisive break below the 4965/60 level with volumes.
From the above chart one can also see that we have broken down from a wedge, tested it with a pullback, found tough resi at the 200 periods MA and now formed the above mentioned bearish H&S. Any shorts initiated here can have conservative stops above the right shoulder and should be immediately trailed to breakeven (in case of any volatile down move). The wedge and the H&S, if it plays by the book can give a 200 pointer move to the downside!!!
Having said that “if it plays by the book” let me also reiterate nowadays we are having a good newsday and bad newsday, and sometimes it’s both the good and the bad newsdays…this is what is making trading difficult and a whole lot of churning is happening. If volatility makes you sick stay out!!!
If you are the patient types then trade Divergences (both hidden and regular), they don’t occur often, but when they do, they surely give some good trades!
To wrap up my favorite quote “TRADE WHAT YOU SEE AND NOT WHAT YOU THINK” and of course TRADE LESS TRADE SMART!!!
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