Month: July 2012

Here is an updated chart of Natural gas.


Our last update saw it is a breakout here-



The breakout from 164 has the potential to hit 204 in Natural gas.


Having already hit 180 . it's wise to take some profits off and wait for a touch of DPOC at 174 to initiate new positions again.


Support below 174 is at 170 now.



The profile chart above shows how value is being built higher every sesssion in Natural Gas.


Clearly a Bull market there.

Natural Gas update

Here is the updated chart of the NF showing the individual profiles.


In my last post I had stressed the importance of 5174 as a support level.


That chart is here-


This morning we opened up right at the 5174 level and when buyers did not show at the open, the market drifted lower into a trend day.



Two important lows below 5177 are 5111 which were the lows of expiry week in June and the 5092 HVN.from 19th June.


The Nifty is expected to get support here, but will meet determined sellers once again if it reached 5172- 5190.



The BankNifty hit the high volume node at 10390 and closed there falling 200 points from the previous support.


It's making an extremely good job at all HVN's ( marked in purple) with it being either supported or resisted.


Short term inventory again got a little too short and the down auction is expected to take a pause tomorrow..


Swing remains down below 5240 NF now whereas levels of 5063- 5080 NF are expected to give support .

Updated profile

Many people would not know that within a short span of time the commodity exchange MCX has risen to become the third largest commodity trading exchange in the world.

It points to the interest prevalent today in trading metals and energy and their like.


We at Vtrender track 5 instruments every day in our trading room and also send out trading alerts for them.


Here's a look at some charts for next week :


Silver  ( Large contract September)



This week Silver traded in a small range with dips to 53200 being bought and rips to 53050 being sold.It ended the week near 52800 levels.


Moving forward the downtrend is still not broken, but high volumes are coming at the current lows as evident in the developing Point of Control ( thick white line) . Also the composite profile ( blue histogram on left) shows a green horizontal line which is the same HVN line showing higher volumes at this price point.


A trading strategy would be to create longs above 53100 with a stop below 52400 as a mark of failure for upside targets of 54500 by the close of next week.


Gold ( large contract- August)



In this week gone by, Gold also maintained it's small downtrend seen from 30400 levels and closed the week at 29300 levels.


There were 2 dips near 29140 which were bought . Like Silver we are seeing high volumes come in at current levels in Gold too.


A quick long above 29250 should bring 29600 early in the week. Sellers would be expected to be back near 29650 and even higher at 29840 which are current resistance. Support below is 28995.


Copper (mini contract August)




Copper was our best performing contract in Order Flow this week. We took a long on Wednesday at the US session open at 425, which we booked yesterday at the open at 429.70 and went short at the same level to see 422 at the close of the session.


Copper saw a good bounce at 420 during the day, a level which we expect to hold.. It may be time to establish long positions in Copper at the start of the week to see an initial target of 424 and later 427.Stops to be maintained below 420.


Crude Oil (August contract)



Crude was the best performer of last week as it broke off a two week consolidation and traveled 200 points higher.


We expect it to hold above the LVN of 5020 ( red horizontal line ) in the chart and consolidate it's gains.


It remains a great day trading instrument much like the Nifty at NSE and with a similar ATR.


Our biggest winner in crude last week was a long at 4815 which was closed at 5099 early on Friday morning.


Natural gas ( July contract)



NT Gas made new highs this week as it broke above the resistance at 166-168 during Friday's session.


Profile picture shows a nice run up and consolidation and evidence of a breakout in the last session. Technical analysts would see it as a bull flag break and even Elliotists would see it a C wave if the break out succeeds.


Order Flow printed longs at 157.4 on Wednesday in Natural gas.

Trading @ MCX

Here is an updated chart t the view expressed on Friday at the close of trading.


You can find that post here-


Here is the updated chart :



The profile has now filled up the single prints from the beginning of the series and is now poised to cover the gap made on the first day of the series.


Today's neutral extreme day is also a breakout of the 2 day balance area.It should now target the HVN 's from 27th June and 28th June. Below that the composite HVN at 5144 will be in play.


Inventory got a little more short on the close on the spiking move lower and if there is no follow through at the open, chances of these shorts covering are higher.That apart the immediate visit to lower levels remains.



Quick update

Spread trading is a little known concept here in India, but if you are a swing trader with a slightly longer time frame in terms of holding your trades, there are potentially great trading opportunities if you are correct in your assessment of the markets.


The opportunity is identifying pairs within a sector or even two different indices within an exchange and utilize the opportunity when you know that one instrument is far outtrading the other.


In the trading room, we love to follow the movements of the BankNifty and it's a little secret that the BankNifty has been the stronger of the two indices.


Have a look :



The upper chart is the Banknifty spot and the lower chart is the Nifty spot plotted on the same scale.


Now if you had been long BankNifty and short Nifty from say the last one month, you would have potentially made a 8- 10 % return on the spread with minimal risk.


This chart below illustrates :



The chart projects a 30 minute picture of a long banknifty short nifty trade with an ATR below.


As can be seen the ATR is fairly flat over a one month period which makes it an excellent spread opportunity.


This spread is currently trading above it's 2 year high, which means that it is time to book gains or even reverse the pair from here.


This information tells us that relatively speaking the BankNifty may stop out- performing the Nifty over the shorter term.


I want to place another chart where I feel the outperformance of another index may be coming to an end too.


We all know that Gold has been a more solid performer than Silver over the past 3 months.


Have a look :



The chart above is the Silver and Gold current month futures on the same time scale.


Unlike the NFBN chart above, it is obvious to the naked eye that Gold has been more bullish than silver from mid- may.


The chart below shows a trade with long Gold and short silver :



The chart shows the spread rising from 0.48 to 0.54 which puts the trade in the green.


These are market neutral strategies and would give you returns irrespective of market movement as long as you pick the right spread.


Once can also pick up pairs within sectors say a long Axis bank and short SBI trade within BankNifty or a long CAIRN, short ONGC within the energy sector.


I'll update at least one  pair in the coming week and we will monitor it on paper.


Have a good weekend.