My Most Favourite Flags (worth unlimited $$$)

Hi Friends,
You wont believe that such simple flag pattern can worth a million dollar, but trust me it is.
Its so simple and so powerful that it can beat most of the powerful techniques, but i recommend it to use it with combination of 3 things - Support, Resistance n Trend Lines.

Just watch this graph of Nifty one minute carefully.


So here we go with our first fantastic flag.....
Flags are most common pattern and can be easily spot in falling as well as rising trend.
Generally Flags are of "N" shape in Rising Trend and inverted N in falling trend.
The first flag in above nifty graph of March 31st is of inverted N flag.
So how I trade flag, see 3030 was a resistance and trend reversed from there. First red candle of the day was the first indication that nifty is slipping in red after touching 3030. Count the candle there are six red candles. Then we have minor pull back of two green candle which retraced around 40-50% of downfall of six candles. Now to make a valid flag the next candles must surpass the previous bottom and on completion our first flag completes. In graph I havent marked the first bearish flag but please not when there is downfall flags look almost like this and you need to quickly enter on the height of that flag.

So if you miss first flag there is always second chance. See the Red circled portion which is the perfect entry point to enter a trade, see how flag formation completed at the red lines which i have marked. Now same thing goes with Bullish flags you have to enter at the white circled bottoms of the flags and trail your stoploss.

Things to note.
I have resized my one minute RT window so that i can perfectly spot the flags. If I see this in a maximized window its hard to spot flags clearly.
Note most of the bottoms are higher than the previous bottoms so you can join the bottoms to form a trend line. In our bullish flags we have a a false breakout of flag and trendline pattern. So how to deal with this. First you have to know what are the support and resistance, or second
which is easier thing wait for the last two flags to break first.

So thatz how I trade Flags, it has given 50 points in Nifty today. :)
Isn't it amazing.

Hope you enjoyed reading it.
Bbye n Happy Trading.

Todays Market Views

Finally Dow managed to close 7500 loosing 250 points. As I earlier mentioned its more of event driven market for some time. Negative news of G.M added to this downward rally. Back to our Nifty it can follow suit and can give a gap down opening of around 30-40 points. On hourly chart last candle was doji so cant say where we can move from here. For some times 2950 may hold and if it breaks can trail to sub 2900 lvls.
Keeping all fingers crossed it will be interesting to watch the battle between bulls and bears.
For some time its best to book profit on rallies till FIIs turn net buyer.

Fabulous Fibs continued.....

Ok,
Here I'm posting daily fibs lvls.
Today is the down day as expected due to profit taking.
Now its interesting to seen if profit taking converts into fresh short buildup.
As per Nifty no call writing is seen and net addition in open interest on 2700 and 2800 PE gives indication that these lvls are not easily broken in near future.
Interestingly Daily charts have given some support exactly on 23% fib lvls, volumes for todays candle is yet to come. Lets see how far nifty can retrace from top to bottom. Also Nifty is still on bullish trend line so break from 2950 on EOD basis can have serious bearish implications. I'll add more indicators, summary and some facts and figures later in the day.
Keep chking.....

Fabulous Fibs Game!!!

Sure Shot Earning @ Put-Call Parity Concept.

Hi,
I'm updating an important concept of put call parity which is one of the most happening concept
in the derivatives market. Before you read further I hope you have some preliminary knowledge of options. Hope you'll love it.
So here we go....

Let start by an example of taking Nifty value.

Nifty Future at EOD is = 3110.
3100 CE(call european)=148
3100 PE (put european) =152

Letz start by how the value of call and put is derived.

Value of call/put= Intrinsic Value + Time Value

For call Intrinsic Value (IV)=3110-3100=10Rs
(Subtract Nifty Future with Strike price which is 3100 in our case)

Time Value= Just put the value of IV in above equation.

i.e Value of call= 10+Time value
which gives time value to Rs 138.

Similarly

Value of Put
152= 0 + 152.
Note here future is greater than strike price of put 3100 so we will say that Intrinsic value of
3100 put is Zero, and rest is purely time value. That means for the same strike market is valuing call =138 and put=152. So logic is that market is overvaluing put, it may or may not be bearish indicator. Our purpose is to make a sure shot gain by this beautiful concept.

So now what you have to do is compare the time value of both the options.
Between 138 - 152 the difference is of Rs 14 and that is our sure shot gain.

So what you do:
Short Future, Short Put(sell the put) and buy call. (Note gains only on expiry/ or if valuations are good then you can reverse your positions.

How you do it.

There is a simple equation on Put-Call Parity which goes like this:

Nifty Spot/Future + Put - Call = Exercise/Strike Price.

This equation says that both side RHS and LHS should be equal and if there is in inequality
there is a gain to be made which is the outcome of sentiments given by the public.

So taking our example

Future+Put=Strike-call.


3110+152=3100+148

3262 is not equal to 3248, so difference is our gain to be made.

Thumb Rule is

Short the greater side, i.e short future, short put.
and long the lesser side which is 3100 call.

Now check your payoffs at any Nifty points there will always be gain of 14 Rs and you will never
make loss. Same equation can be used for stocks too.

Hope you like it.
Happy Trading.

Second Attempt to Breakaway

Hi,
First of all I would like to thank you for reading my first post on Nifty TA, exactly what I'm trying to explain is forecasting nifty moves with combination of technical analysis tools in tandem with some fundamental reasoning and logic.
Here we go......


To begin with we shall start analysis with oct lows and oct high as they are the benchmark points
For beginners if you remove the tails of oct high low candle you will get the nifty range of 3150
on the upside and 2520 on the downside making it into a shape of rectangle. Any move above 3150 will trigger a massive rally that is why 3150 lvl is so important.
So connecting tops from the oct high and bottom from oct low we get a range. If you see earlier attempt in Jan where people bet heavily on this upside breakout from this triangle and gone long
and burnt their hands. A simple volume analysis could have saved their hands. Just see two green candles which are infact supported by some incrimental volume but see the volumes in the subsequent two red candles, they were massive which means market has denied this upmove and fallen heavily. A fundamental or pretty simple reason is that the move which was made after october low was a very quick move (6 sessions or 6 cnadle move) and that too without any strong reason or any prominent news flow. So point here is that move has to be sustainable or else it will always fall with voulmes. In TA we call it a pull back rally.

Now we come to current scenario where we are again on the verge of breakout or say testing the historical 3150 resistance. Situation seems same again coz no expectations of any great news from our corporates as their 3 quarter results were not up to expectations, gdp estimates are lowered down again n again, election is ahead so no major anouncement from govts side so a simple insight will compell you to go short or don't beleive in this rally which most of us are doing.

But but n but there are factors which we still havent counted so far in our analysis, and these are some game changer factor which can surprise many of us. Here are the positives of this rally:

First: There is a famous thumb rule of market which is repeated again and again in the bible of stock market books that if you dont know whats going on just rely on two things Price n Volume. And I dont need to say that this time indeed they are supporting(see charts).
Now you will question me that if there is no major happening they where does this volume comes from?
My Answer: Its a kind of market function where market discounts everything(means adds any positive happenings which are yet to be disclosed in market and negates or substracts negative impact in advance).

Second: In my view this rally can be attached to some events as recent market happenings are event driven. I mean to say global events are impacting heavily on our stock market. As per me first leg of this current rally was attributed to some technical pull back(which simply means when a market makes a new low people try take this opportunity to earn in pull back and start buying to make gains in pullback anticipation(which happens everytime) or a soothing logic is that long term investor or call them value investor see them as an opportunity to add stock in their portfolio.
Second leg can be attributed to the short covering phenominon which usually happens at the month ends where people usually cover their shorts. Means traders started shorting in future and they cover their shorts at lower levels. Well short covering has another implication or meaning that people who shorted at lower levels cover their positons by buying at higher levels to cut their loss(funny I read in ET that short covering happeinng at 2900-3000 lvls). Actually nobody can justify this that whether people cover their short in profits or in loss or both. But common sense says that every month end has seen short covering moving the market upward so a mass psychology works at month end that market has to go up no matter what and stocks start to surge, so I guess people book profit.
Third leg of this rally was due to events, first was Citi Bank(one of the company in dow jones) announced profit in its month end. actually it has also announced profit one month back but this was the second month it caught investors fancy!! amazing isnt it because it was not even a quarterly result, also crude spiked up too at the same time, then news broke out that U.S is planning to announce $1 trillion package, notice the word planning, its still undeclared and we got a massive rally from this anticipation, God knows the fate of bourses when it actually get anounced.
Fourth leg of this rally was triggred recently which actually convince me a bit is that two major sector of our economy started performing. We got news that all the steel sector companies are utilizing their full capacity means they are producing maximum they can, this triggred prices of all the steel companies including SAIL which broke out of the upper end of its rectangle quoting now @ 102 and also Infra sector started performing. Remember Steel and Infra are the major sector of any economys growth, if an economy has to grow it has to post good performance in these two sectors first(its a thumb rule) Now what history tells us is that this will lead to a chain effect means if both these sector start performing it also boost up demand of other sector and we might see overall spike say in auto, banking, cement and so on.....
Fifth Possible leg which is not so far can be elections, again its historical fact in our country that market will have one sided direction at election times either upwards or downwards. I'm just anticipating that a decisive govt either congress or bjp comes in power and can boost up our stock market.
Sixth Possible leg is crude, globally crude has broken its $50 range with good volumes indicating that operations in companies world wide are resuming and there is an actual increase in demand of crude. As our Nifty is concerned we have heavyweights like Reliance, ONGC and Reliance Petro ( Now soon to be counted in Reliance) depend heavily on oil. Also Reliance has broken out of its upper channel and taken out two support so things are building up positively for Nifty.


So conclusion is that market may have discounted all these future and current events which I have quoted above and there are probably some others too which are not out yet and that is why they are moving with volumes. It will be interesting to see if the momentum is maintained and how it breache the historical resistance. And finally my popular indicators Rsex which is exponential moving average of RSI is indicating a clear upside direction and there is divergence between two lines which indicated that rally will hold and williams r% 80 line has become support for this rally.

So all in all we are on a great heights of market, opportunities are there on either side. Just keep an eye on the price and volumes and let me know your views I'll honestly appreciate it.