Namaste - My Learning of Trading in Nifty

[crown]

Price has a memory. Previous high act as a resistance and previous low act as a support.

The same is explianed in detailed with chart example at :-
(1).

h t t p://stockcharts.com/help/doku.php?id=chart_school:chart_analysis:support_and_resistan

(2).
h t t p://www.investopedia.com/articles/technical/061801.asp

(3).
h t t p://en.wikipedia.org/wiki/Support_and_resistance

(remove space between http)

Hope this helps.

With best regards
Hitesh

Thanks Hitesh bhai

But I am looking to understand and if possible, find that how to ascertain the resistance/support, when we have no previous levels. Like, if some stock is at its highest high, then how to figure out at which level it will find the resistance. Same with the support levels.

Any idea bhai?

 

[hitesh]

Thanks Hitesh bhai

But I am looking to understand and if possible, find that how to ascertain the resistance/support, when we have no previous levels. Like, if some stock is at its highest high, then how to figure out at which level it will find the resistance. Same with the support levels.

Any idea bhai?

I think you are referring Fibonacci Extention.

Extensions consist of all levels drawn beyond the standard 100% level and are used by many traders to determine areas where they will wish to take profits. The most popular extension levels are 161.8%, 261.8% and 423.6%.

Kindly go thru the explanaion and charts given at:-


h t t p://www.investopedia.com/articles/trading/05/AdvFibonacci.asp

and

h t t p://www.fibonaccigenius.com/fibonacci-extensions.html


With Best Regards
Hitesh

 

[crown]

I think you are referring Fibonacci Extention.

Extensions consist of all levels drawn beyond the standard 100% level and are used by many traders to determine areas where they will wish to take profits. The most popular extension levels are 161.8%, 261.8% and 423.6%.

Kindly go thru the explanaion and charts given at:-


h t t p://www.investopedia.com/articles/trading/05/AdvFibonacci.asp

and

h t t p://www.fibonaccigenius.com/fibonacci-extensions.html


With Best Regards
Hitesh

Thanks a lot Hitesh bhai for taking all the pain and efforts for helping me.

But, this is not what I am looking for

may be, I have to a bit clear.

Measuring resistance with Fibonacci and previous high levels is based upon some basic principles, which I want to explore and understand in depth. Like, why the earlier high levels will act as resistance, and which high levels will actually act as a resistance. Because, if a script has started rising from its low levels, it has to cross the previous high levels to go up and somewhere, it can take resistance. Similarly, on what basis the fibonacci levels are to be taken as resistance levels. There has to be some psychology or basic principle related with trading to act. If I can understand the basic principle behind this, it will really help me.

Thanks again bhai for your time

 

[rajeabc]

Thanks a lot Hitesh bhai for taking all the pain and efforts for helping me.

But, this is not what I am looking for

may be, I have to a bit clear.

Measuring resistance with Fibonacci and previous high levels is based upon some basic principles, which I want to explore and understand in depth. Like, why the earlier high levels will act as resistance, and which high levels will actually act as a resistance. Because, if a script has started rising from its low levels, it has to cross the previous high levels to go up and somewhere, it can take resistance. Similarly, on what basis the fibonacci levels are to be taken as resistance levels. There has to be some psychology or basic principle related with trading to act. If I can understand the basic principle behind this, it will really help me.

Thanks again bhai for your time

Crown ,
What I think.

Resistance and support are psychological levels created when majority of Investors agreed on that levels.
Now lets assume a new script X is Listing @ Rx_List on coming Monday 20th Sept 2010. How will you decide the target (down/up) ? It would be based on Its Fundamentals and Future prospect and Market sentiments. So if majority believe that Scripts worth Rx_U(>Rx_List) then they(smart money) will start buying it and other investors/Traders will keep monitoring smart money (smart Investors/traders) move . Once it reaches Rx_UP , now Majority think that there is no room for upside left , they will start selling ,and less smart(minority) Investors/traders would start buying ,and price start falling. After some fall say at Rx_Dw smart money again start buying , from weak hands who had bought at higher end, this will become support level.
In future These levels will work as Resistance and Support level(because people would have got position at these levels).

But Again if Script X in future crosses all time high , Rx_U, then new resistance would be defined by Smart money(looking at market sentiments , Fundamentals etc..) as explained above.

Hope I not messed up thing more.

 

[crown]

Crown ,
What I think.

Resistance and support are psychological levels created when majority of Investors agreed on that levels.
Now lets assume a new script X is Listing @ Rx_List on coming Monday 20th Sept 2010. How will you decide the target (down/up) ? It would be based on Its Fundamentals and Future prospect and Market sentiments. So if majority believe that Scripts worth Rx_U(>Rx_List) then they(smart money) will start buying it and other investors/Traders will keep monitoring smart money (smart Investors/traders) move . Once it reaches Rx_UP , now Majority think that there is no room for upside left , they will start selling ,and less smart(minority) Investors/traders would start buying ,and price start falling. After some fall say at Rx_Dw smart money again start buying , from weak hands who had bought at higher end, this will become support level.
In future These levels will work as Resistance and Support level(because people would have got position at these levels).

But Again if Script X in future crosses all time high , Rx_U, then new resistance would be defined by Smart money(looking at market sentiments , Fundamentals etc..) as explained above.

Hope I not messed up thing more.

Thanks a lot bhai
no u haven't messed up at all, rather this is what I am looking to explore.

Please correct if I am wrong to understand that

1. Resistance, in technical terms, can only be decided after seeing the resistance, actually taking place and not in advance.

2. Resistance, in fundamental terms, can be judged require one has the knowledge of judging it appropriate on the basis of fundamentals. Like Smart Money can guess it in advance, because it has some tools as well as information on which they decide the price.

 

[crown]

This is one of the best explanations of why God allows pain and suffering that I have seen...


A man went to a barbershop to have his hair cut and his beard trimmed.
As the barber began to work, they began to have a good conversation.
They talked about so many things and various subjects.
When they eventually touched on the subject of God, the barber said:
"I don't believe that God exists."

"Why do you say that?" asked the customer.

"Well, you just have to go out in the street to realize that God doesn't exist.
Tell me, if God exists, would there be so many sick people?
Would there be abandoned children? If God existed, there would be neither suffering nor pain.
I can't imagine a loving God who would allow all of these things."
The customer thought for a moment, but didn't respond because he didn't want to start an argument.
The barber finished his job and the customer left the shop.
Just after he left the barbershop, he saw a man in the street with long, stringy, dirty hair and an untrimmed beard.
He looked dirty and unkempt. The customer turned back and entered the barber shop again and he said to the barber:
"You know what? Barbers do not exist."
"How can you say that?" asked the surprised barber.
"I am here, and I am a barber. And I just worked on you!"
"No!" the customer exclaimed. "Barbers don't exist because
if they did, there would be no people with dirty long hair and untrimmed beards, like that man outside."
"Ah, but barbers DO exist!
That's what happens when people do not come to me."
"Exactly!" affirmed the customer. "That's the point!
God, too, DOES exist!
That's what happens when people do not go to Him and don't look to Him for help.
That's why there's so much pain and suffering in the world."

 

[rajeabc]

Thanks a lot bhai
no u haven't messed up at all, rather this is what I am looking to explore.

Please correct if I am wrong to understand that

1. Resistance, in technical terms, can only be decided after seeing the resistance, actually taking place and not in advance.

2. Resistance, in fundamental terms, can be judged require one has the knowledge of judging it appropriate on the basis of fundamentals. Like Smart Money can guess it in advance, because it has some tools as well as information on which they decide the price.

Crown ,

Yes , Resistance and Support are based on past data so can't be seen in future.

2: You are fundamentally right. Some time , in bull/bear market , FII/big players will go beyond fundamental and create bubble. Later they will bust it on small Investors.

 

[crown]

Crown ,

Yes , Resistance and Support are based on past data so can't be seen in future.

2: You are fundamentally right. Some time , in bull/bear market , FII/big players will go beyond fundamental and create bubble. Later they will bust it on small Investors.

Raj bhai

Does that mean FII/Big players/Smart Money is capable of deciding the price at its own beyond the fundamentals?

If yes, what are the chances of it being hundred percent accurate all the time?

Or

There are two sides of FII/Big Player/Smart Money, always playing against each other.

And

Is there anyway, beside technicals, to know/understand/find what are they up to?

 

[rajputz]

Raj bhai

Does that mean FII/Big players/Smart Money is capable of deciding the price at its own beyond the fundamentals?

If yes, what are the chances of it being hundred percent accurate all the time?

Or

There are two sides of FII/Big Player/Smart Money, always playing against each other.

And

Is there anyway, beside technicals, to know/understand/find what are they up to?

FII and DII also have to go with the market flow. If they neglect it they will also be bankrupt. They can control it to some extent, but this some extent does what they want. It creates the move in their direction. This last phase of market when it was rangebound, was distribution of shares and accumulation of fresh positions and that was done by FII and DII at different times. What we can say is that market was settling down for a move either to upside of downside.
We cannot be hundred percent sure but we can trade what we see rather than what we think...

 

[crown]

Present Put Call analysis

1. Apparent and immediate reaction is looking upside in Nifty. 5900 and even 6000 are looking achievable during this month expiry.

2. However, there are still good amount of short positions at 6000, which create a doubt over the stability of Nifty above these levels. The downside, if takes place, is only limited to 5800 levels.