How to trade with an oscillator

[murthyavr]

Just to give recent example, we had a sell signal on Nifty Futures 5 min chart after 1:30 on Friday 23-12-2011. This signal worked well...but was there anything to suggest beforehand that this sell signal is likely to succeed ? It is the amalgamation....30 min and 60 min both showing that the brakes have been applied on the upmove and market likely to reverse atleast in short term. And when we had all timeframes speaking in one voice, we had a winning trade.
Smart_trade

ST, we request some more elaboration on this..

1. On a 30min TF, I can see a hanging man candle (13:15) and yes, one needs to
be vigilant at this point of time. And only a down-close confirms the weakness,
which means we needed to wait till 13:45 candle during which time the
prices already dropped by about 50 points.

2. On a 60min TF, there was a good bullish bar (13:15), taking out the highs
of two preceding inside bars. The next candle was a bearish engulfing candle,
but by that time (14:15), half the down-slide was already over..

3. Moreover, on 30min and 60min TFs, we observe that the prices were
climbing up gradually with higher highs and higher lows. Whether it is a
rally or reversal of downtrend, shorting had lesser probability of winning, as
per theory.

4. The only negative thing I could see is stoch divergence between the latest
two peaks on 60 min TF. In between these two peaks, the stoch did not
cross below 50.

We would like to know how you would view the same charts from your perspective!

 

[praveeniitkgp2]

I look at RSI also for profit booking and when RSI,Stochastics,TDST, Earlier support/resistances indicate a particular level, it becomes a good level to book profits as market is likely to reverse from that level.

Smart_trade

Hi ST

Can you please tell us ..how you book profit by looking at RSI,stochastics

thanks

 

[Smart_trade]

Murthy,

I am giving below the way I read the price action on 30 min and 60 min .

1) 30 min chart

First bar , opens with a small gap.....but immediately sells off giving a bearish candle. Next 7 candles, from 10:00 to 1:00 small leggy bars closing at the top but candles not having any body. This indicates that bulls and bears are fighting it out but bears are not in a position to press the market down and bulls unable to lift it up....1:30 bar is the key. Bulls make a final attempt and print a bullish bar but still not able to take out the first bar high., but bulls unable to hold it and the next bar market sells off and cracks the low of the bullish 1:30 bar......this is a sign of reversal.

2) 60 min chart

1st bar opens with a small gap but sells off.....bearish candle....next 3 bars sideways move but not able to exceed the top. And when sideways movement low is broken, we have a reversal.This timeframe showing lower bottoms and it is making lower tops.It made a lower top as against 16-12-2011 3:00 top.

Thus the 30 and 60 both putting bearish pressure on the market and the 5 min short trade has much better chances of success.

Smart_trade

 

[Smart_trade]

Hi ST

Can you please tell us ..how you book profit by looking at RSI,stochastics

thanks

Any support/resistance coupled with RSI/Stochastics in oversold zone , we need to be alert for profit taking. Take Friday 23-12-2011 Nifty Fut 5 min charts....the 3:00 candle had the bottom of 4696.55 and we had a TDST support level of 4694.8 and both Stochastics and RSI were in oversold zones, and Stochastics giving positive divergence. This level is also a top of 22-12-2011 which now acts as a support level.

With the above, we need to book profits on our short positions in that candle or next 1-2 candles at the latest.

Smart_trade

 

[anjanbm]

Dear ST,
On weekly basis there is positive divergence on both stochastics and rsi, those who have sold at higher levels, now is the time to book profits or any other confirmation needed ?
regards,
anjanbm

 

[ashwani chadha]

Any support/resistance coupled with RSI/Stochastics in oversold zone , we need to be alert for profit taking. Take Friday 23-12-2011 Nifty Fut 5 min charts....the 3:00 candle had the bottom of 4696.55 and we had a TDST support level of 4694.8 and both Stochastics and RSI were in oversold zones, and Stochastics giving positive divergence. This level is also a top of 22-12-2011 which now acts as a support level.

With the above, we need to book profits on our short positions in that candle or next 1-2 candles at the latest.

Smart_trade

dear smart trade,thanks for this useful post!!!

 

[ashwani chadha]

Murthy,

I am giving below the way I read the price action on 30 min and 60 min .

1) 30 min chart

First bar , opens with a small gap.....but immediately sells off giving a bearish candle. Next 7 candles, from 10:00 to 1:00 small leggy bars closing at the top but candles not having any body. This indicates that bulls and bears are fighting it out but bears are not in a position to press the market down and bulls unable to lift it up....1:30 bar is the key. Bulls make a final attempt and print a bullish bar but still not able to take out the first bar high., but bulls unable to hold it and the next bar market sells off and cracks the low of the bullish 1:30 bar......this is a sign of reversal.

2) 60 min chart

1st bar opens with a small gap but sells off.....bearish candle....next 3 bars sideways move but not able to exceed the top. And when sideways movement low is broken, we have a reversal.This timeframe showing lower bottoms and it is making lower tops.It made a lower top as against 16-12-2011 3:00 top.

Thus the 30 and 60 both putting bearish pressure on the market and the 5 min short trade has much better chances of success.

Smart_trade

dear smart trade,
thanks for this use full post!!!!

 

[ashwani chadha]

Yes Paul, market in strong uptrend on larger timeframes will take a small 1-2 bars correction and in this correction the smaller timeframe may signal a sell but this sell has very low chances of success an the higher timeframe is in strong uptrend.A car travelling with 140 KMPH does not come to halt immediately, it needs the brakes to be applied, gears shifted down,pressure off the accelerator paddle and then after some time it comes to an halt.

If we are trading 5 min timeframe, one should always see what the highet timeframes like 20 min/30 min or 60 min are doing. Have the brakes been applied on any of the higher timeframes ? Is any timeframe showing signs of reversal ? This is amalgamation of timeframes and amalgamation of trends and if there is any holy grail in trading it is this amalgamation. This amalgamation is difficult to understand and interpret by new traders....but if they can master it, they will go much ahead in trading.

Just to give recent example, we had a sell signal on Nifty Futures 5 min chart after 1:30 on Friday 23-12-2011. This signal worked well...but was there anything to suggest beforehand that this sell signal is likely to succeed ? It is the amalgamation....30 min and 60 min both showing that the brakes have been applied on the upmove and market likely to reverse atleast in short term. And when we had all timeframes speaking in one voice, we had a winning trade.

Smart_trade

what a perfect analysis!!!!!

 

[403.forbidden]

Yes Paul, market in strong uptrend on larger timeframes will take a small 1-2 bars correction and in this correction the smaller timeframe may signal a sell but this sell has very low chances of success an the higher timeframe is in strong uptrend.A car travelling with 140 KMPH does not come to halt immediately, it needs the brakes to be applied, gears shifted down,pressure off the accelerator paddle and then after some time it comes to an halt.

If we are trading 5 min timeframe, one should always see what the highet timeframes like 20 min/30 min or 60 min are doing. Have the brakes been applied on any of the higher timeframes ? Is any timeframe showing signs of reversal ? This is amalgamation of timeframes and amalgamation of trends and if there is any holy grail in trading it is this amalgamation. This amalgamation is difficult to understand and interpret by new traders....but if they can master it, they will go much ahead in trading.

Just to give recent example, we had a sell signal on Nifty Futures 5 min chart after 1:30 on Friday 23-12-2011. This signal worked well...but was there anything to suggest beforehand that this sell signal is likely to succeed ? It is the amalgamation....30 min and 60 min both showing that the brakes have been applied on the upmove and market likely to reverse atleast in short term. And when we had all timeframes speaking in one voice, we had a winning trade.

Smart_trade

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:clapping::clap::thumb:

 

[VJAY]

Dear forbidden,
I recieved ur PM...but my reply not allowed in your PM box ...Pls check it....