Nifty Pivot-based Mechanical Trading System coupled with 2 and 3 Day Swing Calls

[dhavalj]

Thank you MiniTrader99 & Dhaval for shedding inhibitions & expressing your views.

When I joined this forum (nearly a year back) as a learner, I first observed the working knowledge being discussed & realised that textbook knowledge is just not enough. A good screen-based trading experience goes a long way to build your confidence level.

CHARTS is the BEST TEACHER from whom one can learn from - you may hear/see recommendations from others, and wonder what's the reason behind that call. I realised that it's useless asking others, and better to consult the "best teacher" and find the logic myself.
Then, finally shedding inhibitions, I started posting charts & levels ALONG WITH REASONS. I never made it sound like a call or trade recommendation (charts & reasonings were enough to express the directional bias) - obviously, what I see is what others also see - it's just a question of perspective & mindset.
.....

WHEN YOU HEAR, YOU KNOW,
WHEN YOU SEE, YOU REMEMBER,
but
WHEN YOU DO, YOU UNDERSTAND....

Dear Sunilbhai, Thank you for the sagely advice and encouragement. In fact I am learning a lot about the attitude and approach required for trading from you and other great minds over here.
Because of my work commitments, I can only try some position trading and maybe try to time my investments. But still, following your comments on the live markets gives amazing insight into a true trader's mind. I must admit that I do let go of lot of opportunities due to the fear factor and lack of confidence! Hope to overcome that by following the leaders here

 

[meraj_com]

Hello Frinds i am new on this forum THANKS FOR TIHS

 

[Sunil]

nice sunil
keep it up

Missing all my Bengali mentors & friends: you, Asish Da, Satyajit Da, Renu Di, Satyamsit, along with a potentially good trader - Biyas C. (I am not sure if "MilkyBlack" is a Bengali)

The whole forum's taste has changed without you guys....

Please do pitch in your views in any thread whenever you get time...

 

[Sunil]

POSITION AS AT END OF 19-JAN-09

1. Pivot Based mechanical system (Excel file):
LONG signal as at close of 16-Jan @ SPOT 2828 / FUT 2815 maintains & continues.

2. 2 Day Swing
Current Signal: SHORT as at close of 7-Jan @ SPOT 2920 has been reversed to LONG today @ SPOT 2846
SAR = CLOSE BELOW SPOT 2755 (which is the lowest low of the last two trading sessions)

3. 3 Day Swing
Current Signal: SHORT as at close of 7-Jan @ SPOT 2920
New SAR = CLOSE ABOVE SPOT 2868 (which is the highest high of the last three trading sessions)


OVERALL POSITION
The system has given a reversal to LONG signal today.
It will reverse to SHORT signal if SPOT closes below 2755 on 20-Jan.
(Co-incidentally, 2750 is also the S3 level, as pr classical pivot formula)

 

[Sunil]

As discussed in an earlier post, 2853 is the level to look out for break & sustaining on intraday basis.

Excel's Pivot method 2 whipsaws in continuous sessions signal us the looming possibility of reversal of short term trend.

But, as afore-mentioned in previous post, I am wary of a possibility of a lower top below 3150. This can be anywhere between 2870 & 2930.
I will exit my balance shorts on break of 2853 on intraday basis, but may not reverse to longs for positional trade. I still prefer to be neutral in 2853-2930 band, and will keep my trades limited to intraday trading.

Intermediate & short trends, both turned down during Satyam's scam outbreak week. Week Jan 12-16 saw attempts to close below 2800 but failed, as it week ultimately closed above 2800.

I view this more as a corrective rally of fall from 3150 to 2700, and will keep my bear mask ready in 2900+ zone. Logical stop of 3000 would be very close by then.

I would like regular members of this thread to also express their views, shedding inhibitions.

Just to involve a bit of maths here:

2872 = 38.2% retracement = 50DSMA
2924 = 50.0% retracement = 20DSMA

Though not 100% sure as of now, but logically, break of 2700 will also result in BEARISH CROSSOVER OF 20DSMA & 50SMA.

The overall system has given a LONG signal today.
Personally, as mentioned, I exited all my balance shorts (which were initiated at 3100+ level) on break of SPOT 2852 and now, I am positionally NEUTRAL.

I will keep my trades to intraday only, as now the focus shifts to 2870-2925 band. I feel that we might see a lower top in this band (BUT I MAY ALSO BE WRONG). So, this time, I will wait for 2920 zone for initiating small quantity shorts with a stop at break of 3000 level.

Today's high is exactly at that 2870 level. So, tomorrow's action will be closely watched by me. A close above this level turns 3 day swing to LONG too. A break below 2780 signal trouble for bulls, with a confirmatory break of 2755.

These are my personal views, and one may trade according to one's comfort and reasoning.

 

[dhavalj]

Today's movement still gives me hope that the retracement of the first down leg from 3147 is not over yet. Although yesterday we made it to the 38.2% level at 2872, normally wave 2 is supposed to be a deeper retracement. As long as 2701 is not taken on the downside, it could mean that wave 'a' of 2 got over at 2868.2 (yesterday's high). Today we had wave b going upto 2758. Now, if we stay above 2758 we may be in wave c, the final wave of the retracement. Normally there is equality between a & c, but c could also be bigger than a. If we take equality then the target for end of c is 2758 + (2868.2-2701.75) = 2924.45! Thats the 50% retracement level to the first leg. So we may still go above 2900 before the fall starts again. Alternative target for c is 3027 (1.618 x 'a'). But I am not so sure we will touch 3000. I am getting too theoretical and things may fall flat on my face, but with Sunilbhai's words of wisdom, decided to take the risk Secondly seeing the charts here, I realise that I am not well-equipped. I am using incredible charts as of now. Can anyone suggest any free options to see intraday movements? I am not able to follow intraday patterns because of that :-( Also are there any sources which show charts of nifty futures movement? I don't know if this is the right forum for these queries. Kindly forgive. Thanks in advance.

 

[dhavalj]

Sunilbhai, I replied to this message gving some details of my view using 'quick reply'. It said that the message will be displayed after approval from moderator. Kindly help.

 

[Sunil]

POSITION AS AT END OF 20-JAN-09

1. Pivot Based mechanical system (Excel file):
LONG signal as at close of 16-Jan @ SPOT 2828 / FUT 2815 WHIPSAWS once more to SHORT as at close of 20-Jan @ SPOT 2797 / FUT 2776

2. 2 Day Swing
Current Signal: LONG as at close of 20-Jan @ SPOT 2846
SAR = CLOSE BELOW SPOT 2758 (which is the lowest low of the last two trading sessions)

3. 3 Day Swing
Current Signal: SHORT as at close of 7-Jan @ SPOT 2920
New SAR = CLOSE ABOVE SPOT 2868 (which is the highest high of the last three trading sessions)


OVERALL POSITION
Given the extended sideways movement, IT'S COMPLETELY MIXED.
It will reverse to SHORT signal if SPOT closes below 2758 on 21-Jan.

 

[Sunil]

ping pong between spot 2700 & 2850 so many times...
reaction after today's fall is crucial

if we take it as a rectangular band, then any side's break = 150 points
2850+150 = 3000
2700-150 = 2550

break below 2700 MAY also mean bearish crossover of 20& 50 DSMA
refer my mechanical thread for more indepth

Phew!!!
7th day today where bar has formed between 2700 & 2850.
Time is ripe for some breakouts in either direction.
As mentioned for yesterday's intraday trade, it's better to stay neutral, though the intermediate trend is still down.

Now, again to analyse when can we say that today's downmove was again a failed move.
Again, we resort to Fibonacci retracement levels:
for 2870 to 2760 (SPOT)
50% = 2815 (last hour's rally high)
61.8% = 2830

So, if tomorrow it sustains above 2815 and also breaks 2830, we again for whipsaw; (with a chance of an inverted head & shoulders pattern with neckline at 2850-70). Here, my longs would be limited to intraday only (as have been persisting before)

Today's LOD (as mentioned in intraday thread coincided with Friday 16-Jan's LODs, with respect to both SPot 2758 & Fut 2736
So, if tomorrow, Spot breaks 2758 intraday, I would look to initiate shorts with 50% of my usual quantity. Will add more on break of 2700.
As mentioned above, stop would be at Spot 2815.

 

[Sunil]

4 more trading sessions before expiry day...

LONG STRANGLE OF NIFTY

Nifty spot = 2770
Buy Put 2700 cmp=55
Buy Call 2800 cmp = 55
Total cost = 110
Breakeven = 2700-110 = 2590 on downside
and
2800+110 = 2910 on upside

Those who think that by 29-Jan, spot will go below 2590 / beyond 2910 may try this strategy.