In UNITECH there are many times consecutive NR7 days. Even today 22/03/2010 is also a NR7 -2 day. What does it signigy? Does it mean that a big either up or down can happen in UNITECH and such big move is due to arrive?
Sujit,
NR7 - 2 days, just indicates that the stock is going thru longer consolidation. i.e. market particpants are not sure about the next direction and hence waiting for someone else to
kickstart new trend. In my observation, there is no direct relation between longer consolidation and size of next move. But direct correlation is generally true, specially if it is supporeted by trend of overall market.
Generally one of typical occurance of such long consolidation is false breakout. Cause there is lack of interest in stock by biggies, hence other players (with sufficient financial power) try to test the demand supply and push the prices in that direction. For eg - Unitech is not able to cross 75. So players will push prices to 75.5 to see if new sellers are entereing the market or more buyers are following them.. As per my understanding, key decision from biggies don't react to 5 min/ hourly chart, hence it is possible for price to show in shorter term as if it has broken upward. But then biggies comeback next day to either push it down.. and give us false breakout.. or they support and start buying giving us successful breakout. So, I would suggest to excercise patience and watch out for what happens after the breakout and trade accordingly.
And even if your stops are hit, don't forget to watch for great trade in other direction.
In this post I have mentioned about what to observe in false v/s successful breakout.
http://www.traderji.com/advanced-trading-strategies/29825-trading-nr7-setup-45.html#post384035
If you like to trade Unitech, then observe yourself on Unitech chart and note how did the stock behave after NER7-2 day breakout in the past.
I remember Rohan, has done similar study and he has filtered many stocks that have tendency of going in multi day consolidation and focus only on other stocks that have more regular trading behaviour.
For Powergrid, 19/03/2010 was a NR 7 day. But it had not gone above NR7 day high and ALso not gone gone below NR7 day low on 22/03/2010.
What does it signify? Is it a failed NR7 signal? How one can trade based on this failed signals?
Powergrid did break on downside of yesterday's range.. but the break turnout to be false today.. as price has returned to yesterday's narrow range.
So we can't say at this stage that the stock has shown bearish breakout.
Check out the rules of breakout identification in given link above.. Maybe that will help you in reducing the confusion and taking objective decision to trade.
In my view, trading is not about being right in evrey trade. It is more about, finding low risk trade entry, accepting smaller losses and riding the winner to collect maximum profit.
Happy Trading.
