July 5, 2019

Market outlook + Budget day analysis

Daily charts:
- today was budget day
- typically these days one sees a lot of volatility
- right enough, markets opened flat but lost 180 points intraday
- (adjusted) close was however 1.1% in negative at 11811
- AD was 5:13

- the level of 11800 is important as it has offered support in the past

- today was also the last day of the week
- and the 5th week when nifty attempted to close above 12000 but could not
- so 12000 becomes a very important swing level

- note today's red bar was the biggest this week and "engulfed" prev 4 day gains
- this means there is a high chance of trend changing to down

- but as markets are rangebound, I will wait for close below 11600
- unless a higher swing low forms

- hourly charts will give signal first for trend reversal

- surprise - vix down actually down 4% so no fear?

Other indices:

- selloff was substantial across other indices
- but surprisingly banknifty closed flat
- FMCG also closed flat but I don't track this index

5 min charts:
- as indicated earlier, I did not trade due to expectations of high volatility
- stops can easily go for a toss
- intraday swings were 80 points in less than an hour
- and sometimes 40-50 points in less than 10 minutes

- this is the plain chart with possible trades (no indicator)

5 min chart with kplswing indicator:
- first sell signal was at 11970 F
- there was no buy signal

- a "tight" SL would have given 4 short trades with no profits no loss
- this is typical in volatile days where trailing SL gets hit

- on the other hand, a so called "high conviction trade" like short on first signal and cover at close  would have given excellent profits
- a short trade at 11970 F with SL at 12000 would have given 100+ points in tension free profits
- so all this is a matter of strategy
- sometimes one method will work and some other time it will not

- a price action trader would have earned massively today
- but this technique is not easy
- someone like@Fornifty has earned 170 points today

See more at https://twitter.com/ForNifty

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