Nifty moved up 3% with the day open being the low and the close the days high. Single side session.
These kind of moves are rare and has a probability of 1-3% which is quite extreme. They are outliers and make the fatty tails.
Anyway what does these kind of move implies going forward. Lets dissect it.
There are many ways these moves can be analysed. I used the following criterion:
1. Is its a bull or bear phase?
2. What is the color of Weekly charts? (Buy/Sell or Lev Buy/Lev Sell)
3. When the nearest bottom (or top for bullish phase) occurred?
4. Previous instances of such 3%+ moves.
5. And lastly the volumes on that day.
The main theme that came out is that in Bull phase these moves come mainly at the top formation while in the bear phase these kind of moves do break the otherwise decline while further upside is not always there.
The top (Close) of such moves do offer resistance while bottom (Low) does not give much support unless it is the first lowest low. In bear phase the move after such days does become more range bound than trading (going by occurrences in past.)
Also there is remarkably more such instances in bear phase than in Bull phase unless the market is recovering from a major bottom. This shows short covering moves in bear phase.
Since we are already in bear phase, I feel that we can expect some sideways trading here with 5600 to be resistance. The trading from here will be erratic with lesser trend trading opportunities.
These kind of moves are rare and has a probability of 1-3% which is quite extreme. They are outliers and make the fatty tails.
Anyway what does these kind of move implies going forward. Lets dissect it.
There are many ways these moves can be analysed. I used the following criterion:
1. Is its a bull or bear phase?
2. What is the color of Weekly charts? (Buy/Sell or Lev Buy/Lev Sell)
3. When the nearest bottom (or top for bullish phase) occurred?
4. Previous instances of such 3%+ moves.
5. And lastly the volumes on that day.
The main theme that came out is that in Bull phase these moves come mainly at the top formation while in the bear phase these kind of moves do break the otherwise decline while further upside is not always there.
The top (Close) of such moves do offer resistance while bottom (Low) does not give much support unless it is the first lowest low. In bear phase the move after such days does become more range bound than trading (going by occurrences in past.)
Also there is remarkably more such instances in bear phase than in Bull phase unless the market is recovering from a major bottom. This shows short covering moves in bear phase.
Since we are already in bear phase, I feel that we can expect some sideways trading here with 5600 to be resistance. The trading from here will be erratic with lesser trend trading opportunities.
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