On Monday 13th Aug 2012, it is better to go long above 5330 with SL of 5318. Expecting market up in first half and would go down in 2nd half most probably from 5350-60 level. This could be the day when market will decide future course of action.

Expiry Logic

If the prices are trading below 60% mark of its range for the settlement, bulls are weak and the settlement will end closer to the lows, often, making a new low for the settlement day.

And vice versa for upmoves/ bulls.

ATR Formula

PC-ATR*.80 to PC-ATR*0.50 Buy Zone
PC+ATR*0.50 to PC+ATR*0.80 Sell Zone
where PC is previous day's close.

Bears get weak near PC-ATR*0.50 to PC-ATR*0.75, 
but get charged up below PC-ATR*0.80 for a target of DH-1.5*ATR

Bulls get weak near PC+ATR*0.50 to PC+ATR*0.75, 
but get charged up above PC+ATR*0.80 for a target of DL+1.5ATR

where DH & DL are current days High & Low respectively.

Topping Process

What does a topping process look like? There’s a significant high. After reaching a significant high, the market uses to have three options.

A: The market turns immediately after reaching the high falling severely in the further course without testing the high again, rudimentarily at least.

B: After the high the market is consolidating/retracing for one to three days then going up again in order to test newly the significant high. In case of a volume above average this test fails being produced a lower high, or it reaches the surroundings of the first high again respectively, turning down again subsequently – finally forming the slightly higher high or the double top respectively.

C: The market overshoots again the first high after the one to three day correction of the first high, and after overcoming the first significant high the market being pushed up by a volume above average, and subsequently exhaustion in price and volume takes place. A durable fall cannot happen before the market is completely exhausted because there won’t be any buyers left and the short sellers get into a superior position.

Trade Plan for 2nd April 2012

Short nifty at 5355 with SL at 5375.

Weekly R1 is at 5356 and Daily R2 is at 5372. Nifty has traveled far from 5135 without any retracement. So this will be good place for short opportunity. Asuming nifty touch 5355 (+220 pts) its Fibo. retrace levels will be around 5270 ( 38% ) . I will go long there for higher targets ( i.e. upto 5440) This 5250-75 area is pivot area for weekly(5246) & daily (5268) pivots. So going long in this area with SL of 20pts is good trade setup.

If Market opens between 5310-20 then Go Long and see if it is crossing 5335. If nifty is struggling around that area reverse the trade and Go Short no need to wait for 5360. Nifty needs to cross this 5335 level to negate any bearish possibility exists. Having crossed 80% Fibo of 5386-5135 it will give bulls confidence of 100+ points on upside.

Let's see where we open on 2nd April.