Support and Resistance in Day Trading - View on 17 Jun 2009

I was away for three days - almost three life times in day trading.

After a quick look at the nifty charts over the few days and also keeping in mind the US market action yesterday, here is my trading strategy:

Trade with a negative bias.

In particular, if the market opens slightly higher than 4520 ( say 4550) - make an operating assumption that 4600 will be a significant resistance level. Why 4600 as a resistance level?

Look at the 5D chart which shows that 4600 was a support last Thursday and broke down on Friday. So it is relatively safe to assume 4600 as a good resistance.

With this assumption you can short closer to 4600 ( in the 4560-4580 level) with SL at 4615. If SL is hit, I would refrain from trading short or long and wait to see if there is a new resistance level. Of course for another breakout to happen 4710 has to be crossed.

If the market opens lower, I would wait 4480 to be broken decisively before shorting. Yesterday's high 4540 will be a good SL.

Lots of options. The trick is to pick one strategy. If that works for the day, good. If not, study the market action and try to understand what the message is before putting in a trade!!!

If you have any comments please write to me at stockmarket.methods.in.madness@gmail.com

Disclaimer: The above analysis is just that - my analysis. If you choose to trade on the basis of this analysis, you will be solely responsible for the outcome of the trade - profit or loss. Please keep in mind that trading and in particular day trading is not for the novice and there is significant risk of loss of capital in trading.