Trade Set up : 6th - 8th Feb

NIFTY :  Confusing.....
                Look at the daily chart , the channel in which we are , the lower end has so many touchpoints ( green arrow points). As a rule , this makes the lower end of the channel super strong , too tough to break.

But this contradicts with falling MACD. It is falling towards zero and once below it , falls can be rapid with already negative divergences posted by MACD since so many days .

The leading indicator (Channel) says : Reversal is near
The lagging indicator (MACD) says : Sorry Boss.

What should we do ?

I am taking 2 more factors before drawing a trade plan :

1) Volume

Volumes are the key near channel boundaries .
Low volumes tend to indicate , channel shall NOT  be broken and reversal is Near.
High volumes tend to indicate , channel MIGHT get broken with a bang.


2) Weekly Charts

Lets see how weekly charts are panning out.

Till yesterday , candlesticks have formed a bearish engulfing and MACD rushing towards a bearish crossover but , the week is now over yet and if prices start to move up firstly the bearish engulf will be disrupted and then MACD cross will be prevented ( Chances of cross stays low as angle to slow ema in MACD is straight to upwards )

Anyhow : Weekly Charts says : Coming Moves Can be fierce in either of directions.

Trade Plan :

With all my ability , I stick to play the way a trader should be.
Yesterday GAP gives me a wonder full opportunity to trade in the direction of fierce movement (SHORT as per the gap created).

So , I will go SHORT with 5970 as strict SL.

What if 5970 is screwed ?

I wont blink a second to reverse my positions to LONG SIDE.
Once prices starts moving up , Weekly charts will stay in its bullish shape plus daily channel would be protected shooting the prices sky high.

SHORT at current prices with SL 5970
Above 5970 , go LONG with SL yesterday low 5944.
Volumes should be watched during the day to ensure the trade direction.

*Please ignore that cci indicator in both of the charts. I had never used it neither i know what rocket science is that. It got just slected by mistake and i noticed it after the charts were drawn..

SS