Month: January 2011

Here is is a daily bar chart of the Nifty spot, showing activity over the past twelve months.

This is the 4th Big correction in the past twelve months and each of them are shown in purple rectangles.

Each correction has so far done the stipulated 600-650 points, the normal correction of the NSE generally.

Time wise also the two corrections are spaced out in the correct order and seem to be following the same pattern again.

I’ve also included the 50 Sma and the 200 Sma for a trend check and we have defended the 200 sma successfully near 5614, the traditional line that differentiates the bull and near markets.

So the Boxes and the sma seem to say that the correction is over.

Will markets listen to History?

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Daily Charts : Corrections

If you have been following the blog for sometime you would know of us as passionate Bank Nifty traders.

Most of the time you will see on this blog a Nifty chart along side the Bank nifty.

Our reasoning is very simple- We Consider the bank Nifty as the leader of the two instruments, a fact which has helped us and kept us ahead of some major moves of the market.

So as the market revists the 5750 zone, it pays to keep an eye on what the bank Nifty is doing currently .

Here is the profile chart of the past five days :

As you can clearly see we have operated this entire week well within the 10960- 10380 range set on the 14th of Jan.

Today the bank Nifty stayed above the 10488 point of control of the balanced profile on the 17th of this month( brown dashed line). Infact it was the low of the day today.

Relatively speaking it was much stronger than the Nifty future which broke below it’s level of 5661 in early action today.
The high of the day today was actually the point of control of the profile dated 14th of November ( brown dashed line from 14th ).

Much of what can happen tomorrow will depend on how well the Bank Nifty can negotiate with the seller at 10920-10940.Success here will easily bring 11040 and 11185/ 11270.
If the Bank Nifty does manage to do that, then we will be witness to the nifty future flying over the 5750 level.

Supports will be at 10824/ 10736.

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Bank Nifty

It’s been my long held belief that if you are not looking at the markets through price and volume as a combination, you are in fact looking at the market through one eye!

Over the years, in chats with several traders I have found that those traders who watched volume alongside price always emerged more successful than the ones who followed only price and price based indicators.

There are several different ways of watching price and volume together and these are as varied as the different methods employed by successful traders over the globe in reaching the same objective-to be successful in their trading.

Surely in trading it’s the ends not the means, and if you are successful then it does not matter.

But if you are still looking to get that edge to define your trading, and googling for a methodology or a trading system, then there is none better than Market Profile.

Consider these words from yesterday’s post here :

Both of them are forming bell shaped curves, indicating balance coming back to the markets.Whilst this does not discount the possibility of another sharp spike lower, today’s action does indicate exhaustion of the dominant trend.

If the market needs to go down , it would be new sellers who will have to enter to bring it lower, but any good upmove will put 5745 and 5815-30 back in play.

If you have been studying profile , it wouldn’t have been difficult to figure the 80 points from close to close. Or the fact that we stopped 3 points away from the 5745 level ( why ?) or the low of today was value area high from yesterday ( how ?).

I had posted a chart earlier on the impact value areas have on the motion of the markets.You can find that same chart here

These markets can be tamed and you can be profitable as much as any big institutional player or fund house.

You just have to choose the correct way.

Order Flow charts of today :

Nifty :

Bank Nifty :

Charts need to be read as blue for buyers and red for sellers. More details about OrderFlow are there in last night’s post.

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Power of Profile

Here is a chart of the NF daily profile showing volume accumulation as well as all the HVN’s and LVN’s.

The chart is daily prices.

The brown shaded region represents the volume traded as a profile.

The red lines are low volume nodes.

The green lines are high volume nodes.

Clearly the largest volumes are traded at 5810-5824, which will have to be taken out on closing basis should the Nifty future want to march upwards.

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NF daily profile

Here are the orderflow charts of today from the trading room.

Nifty OF :

Bank Nifty OF :

I have received a number of emails on the subject of these orderflows.

I wish to touch on a few points.

1) Even though I use the word “indicator” to describe the OrderfLow, it actually is a trading system designed for trending & non-trending days in the market and even two types of intra-day traders.

2) The Order Flow is actually a trend indicator and one of the most powerful out there.

3) The flexibility we have is our advantage to see both of them work together in live markets and in different situations.It’s like riding this market in 2 “gears”. One needs to use the right gear whilst trading the market

4)The smaller green-pink is for range bound days and the larger Blue-red is for trending environments.Use the lower gear for range bound markets and the higher one for fast paced trending markets.

4) The Order Flow is the general buying and selling of the markets. The Markets are driven in the direction of the larger demand or supply.Since OrderFlow tracks changes to the same, it cannot go wrong.

5) The OrderFlow trend indicator system will work in all markets and every timeframe.The past two days of activity -trending & volatile on friday and non trending & volatile activity of today are the best barometers to check the utility of these systems.

Hope this clears the air.

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Trend Indicator Charts for today