In the last week’s post, we mentioned that the underlying trend in the Nifty was bullish and buying on dips would be a safer strategy. While we were right about the direction, the long position would have been stopped out as the Nifty was too volatile in the early part of the week.
In this context, we would like to point out that Newton’s First Law of Motion is applicable to trading as well. A trend remains in force unless proven otherwise. While it is very easy to get opinionated, it must be mentioned that a trend stays on course and it takes quite an effort to turn it around. Have a look at the 15-minute chart of the Nifty featured below.
It is evident that the bullish sequence of higher highs and higher lows is pretty much intact. The sharp crack witnessed last Monday is did nothing to disturb this sequence. The Nifty has to fall below the swing low at 5,970 to even consider about shorting the Nifty. Any pull back would be an opportunity to go long, with a stop loss at 5,920 (well below the recent swing low of 5,970) for a target of 6,350.
Those with an eye for detail would have notice the MACD Hook-up pattern in the Daily chart of the Nifty last week.
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