Lessons from the Pros

India Markets

Trend Trouble?

If you have been struggling with identifying the trend of the broad markets lately, you are not alone.  Globally, there have been wild swings as economies and traders are trying to determine if equities are overbought or likely to continue to rise to new heights.

Through all of the noise of “experts” on television and in print, one thing will always tell the truth: the charts.  We need to rely on our own analysis and use the core strategies of Online Trading Academy to find the best opportunities with the highest probability for success.

Focus on the basics of trend and start at the larger timeframe.  Looking at the weekly Nifty chart, you can see that we have made lower highs and lower lows in price which suggests a downtrend beginning.  The fact that price paused short of the demand of 5907 last week is not a good thing.  Usually a pause before a supply or demand allows price to build momentum to break the level.

nifty feb weekly

The daily chart is also bearish as we see the same trend shape.  Additionally, the eight period exponential moving average (EMA) is acting as a bit of a trend line for the index. In bullish trends, price fails to close below the EMA.  In down trends it fails to close above.  Even in Friday’s bullish candle, we closed below that trendline.

nifty feb daily

As there is no strong demand on the daily chart until 5780, the focus should be on shorting opportunities when prices rally to supply.  The moves upward seem to be corrective in nature rather than true buying pressure.

As always, protect yourself with stops when you take any trade.   To learn more about trading like a professional, enroll in our courses at Online Trading Academy.

Brandon Wendell

DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.