Nifty multi time frame trend: Strength of convergence

In my last post on trend indicator I mentioned that there is struggle between short term traders and long term investors which makes trading difficult as the range comes into play and trend gets erratic. Link here.

After that the Trend indicator gave a confirmed sell signal on both the Hourly and 4 Hour time frame. With that the last range was broken and RSI also shifted to bearishness as it broke the support of 30 levels.

Today the index declined 2% which came as surprise to many but our Trend indicator indicated quite early that trend is bearish now.  Attached is the chart.

Confluence of trend gives the best trading opportunity. 

SPX multtime frame trend chart

SPX has come to 1264 levels after breaking from the 1300 levels. We posted earlier that any break of 1300 levels can lead to straight fall. Link

The index has broken the first support of 1275 and is heading to 1250 levels.

In our multi time frame trend indicator we had a sell from 1330 levels. Attached is the chart.It shows how the bullish trend was captured and then the decline also. There were 2 whipsaws one long and one short. But the loss was not much. The trend followers look to capture the larger trend like the first bullish signal while keeping the losses minimized.

Nifty Trend multi time frame The fight of long and short term traders

Nifty has bearish trend activated from mid Friday and after touching the 5480 support the index is now flat.
The bearish hourly trend was of smaller duration.

Were there any indications of that happening? Yes there was.
The answer lies in the higher time frame trend. The 4 hour trend was bullish.

Whenever there is mis alignment of traders (short term) and investors (long term) the profitable trend is less.
It is there alignment also where trend is smooth and trade able.

SPX 1300 the line between Bulls and Bears

The SPX index closed just above the 1300 levels on Friday.  The candle was full body down with a negligible uptick from the lows. This shows the kind of pressure in selling.


The  last few attempts at 1300 were defended except for the sell off in March. And there is a very remarkable similarity between this and March's candle. Both were full body downsize candle. The other two attempts exhibited a bullish hammer at 1300 levels.

Will we break the 1300  levels this time and give a conclusive close below those levels?
Well the kind of candle does indicate sellers in control of the market with 3 consecutive bearish candles below the 50 SMA.

Any follow on below friday's low with bearish hourly candles is a sell opportunity.

Nifty Trend indicator in Sell mode

The trend indicator has turned to sell mode on Friday mid day.

The index turned down exactly from the 5600 levels which has been resistance for last 3 rimes.  This was the 4th touch and it has failed to take that level out which paints a very bearish picture. 

The buy from 5427 turned to sell at 5543 levels. 

Emerging Markets ETF

Emerging markets are generally regarded as the risker trade then the SPX. They are generally leading indicator of the change in the risk perceptions around the world.

The EEM etf is a good way to track the performance and perception about the emerging markets.

This etf has been in range for some time after breaking out from the resistance of 48 but then it reverted back to channel just when the commodity selloff started. This was also partially attributed to the QE2 end when risk reduction started globally.

The ETF now is holding the grounds quite well as it held the last range support of 45 and now has formed a falling wedge kind of pattern from where the breakout is happening.  The bullish breakout is confirmed above the 48 levels as it will be then above the range high.

Worth noting is the change in slope of relative performance w.r.t SPX.

Does this indicate the change in perception to risk especially when the US indices are falling?
As the emerging markets have both growth and domestic consumption not depend on US economy.

Nifty Resistance still holds though picture is looking good

Nifty hit the old resistance at 5600 levels and saw gap down opening. Though the sell off was more news based but our charts predicted that the bull bear line at 5600 matters a lot.

The picture is bullish as the hourly trend indicator is still bullish as price is above the levels.

This is the third time 5600 is hit in last 1 month for Nifty and it has failed to cross. The next touch of 5600 will set the trend.

Nifty in hourly trend.