Trading with Median lines is a system and a leading indicator suitable for Swing trading.I am following this strategy for Nifty and Bank Nifty with good results.Those interested to trade with Charts and Price action to analyse target price, support and resistance levels will find this strategy very interesting.

Feedback welcome!Happy trading...

Friday, January 14, 2011

Trade Setups - Retest of UML

15 min chart 14.01.11 @ 11.15 am

Analysing Chart with median lines for high probable trade setups .
Red ML drawn from Swing high of 6178 thro swing P1 - P2.
Trend indicator - 50 SMA
Indicator STH 35,3,3 setting - For oversold / over bought indications / for confirmation of entry / exits.
EMA - 5-20 crossover - price crossover from top or bottom for short / long entry

After drawing the red ML, The price has not crossed the pivot at P2.The price tested the UML parallel and next bar closing below the test bar.
For taking the trade the following parameters are used.
  • Downsloping median Line - So Short trade.
  • Low risk with tight stoploss at entry below low of test bar
  • Confirmation and adding to position at crossover of 5 / 20 EMA from top.
  • Price closing below 5813 ( median price of week high / low ) and closing below 50 sma gives confidence in the trade.
  • Target 1 is range of P1-P2.The point reached at the median line was equal to this range.So profit booked for this time frame.
Next what?
  • Drawing a Blue Up sloping median line to chart the upmovement.
  • Resistance expected at - downsloping Red UML parallel / 50 sma ( for 15 min Time frame)
New Short trade probabilities
  • 1.Price reaches 50 sma and moves downward.Enter at test of UML and close below test bar
  • 2.Price moves up till higher resistance levels / previous swing pivot high - 5875 / Blue median line test , moves close below test bar and 5 ema moves down and crosses thro 20 ema -STS and crosssover down will add to confirmation of trade.
  • Target 1 will be range of previous swing , then range of parallel swing with trailing stoploss.
  • Above Pivot P2 , the short trade lookout will be closed and look out for long trades.
Will watch how this analysis pans out.

15 min Chart Update @4.00 pm

The price moved well above 50 sma upto the Blue Median line and turned downwards.Took the 1st position trade close to the 5800 NF level .Went for a short lunch break and missed entering after the 5/ 20 EMA crossover.The price fall was so faaast !!
Drawing another orange Median line once the price crossed Blue LMLparallel.
Right now the price is close to the downsloping red median line where it can pause for some time and then continue its move downwards towards the lower daily targets.
The lower target of 5533 is very close , just about 100 pts away.So close trailing stoploss to be maintained.
Looking forward to the upward journey also once this downtrend is over.:-)

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