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

[dhinakar113]

Thank you, Sunil for your detailed posting about the imminent BO. Keep it up. Hope, you have fully recovered and Wish you Good Health always.

 

[Sunil]

POSITION AS AT END OF 13-Feb-09

1. Pivot Based mechanical system (Excel file):
SHORT signal as at close of 12-Feb @ SPOT 2893 / FUT 2888 whipsaws back to LONG signal as at close of 13-Feb @ SPOT 2948 / FUT 2946

2. 2 Day Swing
Current Signal: LONG since close of 6-Feb @ SPOT 2843
SAR = CLOSE BELOW SPOT 2887 (which is the lowest low of the last two trading sessions)

3. 3 Day Swing
Current Signal: LONG since close of 6-Feb @ SPOT 2843
SAR = CLOSE BELOW SPOT 2878 (which is the lowest low of the last three trading sessions)


OVERALL POSITION
LONG signal is being maintained since close of 6-Feb @ SPOT 2843.
It will reverse to SHORT signal if SPOT closes below 2878 on 16-Feb.

(I have taken the 3day swing low, since there's hardly any difference between 2day & 3day swing lows).

 

[Sunil]

First, the bigger intermediate range: Spot 2500 - 3150
The upmove from 2500 to 3150 had corrected by more than 62%.
50% lies at 2825
38% lies at 2905

Then, for 3150-2660 downmove, we have
38% = 2845
50% = 2905
62% = 2965


For 4 weeks from 15-Dec-08, there was sideways (rectangular movement) from 3150 to 2800 (150 pts).
It broke down during fist half of Jan-09, and nearly reached its target of 2650 (2800-150).

Now, we have a broad 4 week sideways movement of 200 points from 2870 to 2670.
It has taken a form of Inverted Head & shoulders pattern in Daily charts; and in weekly chart, we have an inside bar.
Thus, we have reached an inflection/saturation point where a breakout is imminent during the week 9-Feb to 13-Feb.
Even bollinger bands have contracted and signal a spike.


But in what direction:
Well, there has been a BEARISH CROSSOVER OF 20DSMA & 50DSMA. Such crossover had a very negative effect on previous 2 occasions - June 08 & Sept 08.
RSI(14) on EOD chart has reached a crucial RSR level of 50, as can be seen on chart - for bullish moves, it needs to sustain above 50.
EOD/60min charts and Above Fibonacci levels indicate 2900 to 2930 as a major hurdle.
If we consider the inverted H&S then, as per textbook, the right shoulder's low is key for such pattern's negation.
Such level is Spot 2755 which is 2day/3day/5day/weekly/Feb month's swing low...

So, tomorrow's price action at 2870-80 zone & reaction at 2900-2930 zone is important for setting the trend for rest of the week.

Still, no positional longs for me - all longs on intraday basis.

It would be a bad surprise for me if we close between 2800 & 2870 again tomorrow & a rude shock if it happens again on Tuesday.

So, we had a decent breakout of the band last week, with the Inv. H&S pattern's neckline level providing good support after breakout.

The pattern has a target of Spot 3070. Incidentally, Spot 3070 seems to be a Laxman Rekha of sorts for this rally with key moving averages lying in this zone.
The 100 Day Simple Moving average is at 3065;
The 20 Week Exponential Moving Average is at 3093;
(these two moving averages have been like a pivotal/laxman-rekha levels, and will be illustrated in next post)
Also, the weekly chart pattern shows resistance at that zone.


One thing which has not changed is the Bearish crossover of 20DMA & 50DMA, as shown in above quoted post.
It's effect will come with momentum on break of right shoulder's low of 2750.

Key immediate support is Spot 2880.
1) It's the neckline of the Inv. H&S pattern.
2) 50DMA is also at 2880.
3) 2day & 3day swing lows are in 2880 zone.
4) Pivot low as per EOD chart.

From 60min & EOD charts, one can see that uptrend is now in its zenith stage.
As long as 2880 holds, we can expect to see 3000 & 3070.

Thus equation is simple - consider 2880 as a pivot level.
Spot is strong above / weak below 2880.
Initial support at 2770-50
Resistance at 3000 / 3070.

 

[Sunil]

Link of September post, highlighting the strength of 100DMA as a resistance level, before nose-dive

5 trading days make a trading week;
Let's see 100DMA's relationship with 20W EMA

Latest snapshot of 100DMA & 20W EMA:

 

[saurabhsabnis]

Thank you dear sunil.your post are too good for a person new to trading.your explainations and your excel sheet are very good.keep doing the good work.appreciate it.

saurabh

 

[lankesh]

thanks for your valuable analysis

 

[krishna79]

Hi Sunil,

I have read your article on Mechnical trading on Pivot based. Can you provide with the excel sheet , i can't find it.

Regards,
Krishna

 

[Sunil]

Hi Sunil,

I have read your article on Mechnical trading on Pivot based. Can you provide with the excel sheet , i can't find it.

Regards,
Krishna

The Excel file is attached with the third post of this thread. It is always updated on every Sunday.

I have updated that file with latest (till 3-March) details...

 

[Sunil]

Since one cannot edit his posts in the forum for the time being, I cannot change the date mentioned in the 3rd post to today's date.

here's the link to the file
http://tinyurl.com/5cjgzp

 

[thesaint]

Dear tsunil4u
can u explain me how can i read the 2/3 day swing call signal reversal level also summary call of calculation pls do explain it in simple language hope to hear from u very soon and also would like to thank u for the excel file its very helpfull and a good tool tooo..........

regards