Nifty opened Gap Down this morning on account of the Goldman Sachs fraud. Day low today was at 5160 which is somewhere near the base of the channel. Take a look at the 3 fans - both from the low of 4670 (Feb 2010) to the intermediate high 5400 & also look at the 3 fan back in Nov 2008 and June 2009. You can see good supports coming in at 5050 & 4800.
Also, take a look at the renko chart. Brick size 104 pts. There is no significant change in direction of the trend. Over the long term we may see a target of 10500 on Nifty. What is a renko chart? (From Stock Charts) Renko charts are price charts with rising and falling diagonal lines of boxes that are either filled or hollow. Renko charts are "time independent" charts that do not have constantly spaced time axes. Renko charts have a pre-determined "Brick Size" that is used to determine when new bricks are added to the chart. If prices move more than the Brick Size above the top (or below the bottom) of the last brick on the chart, a new brick is added in the next chart column. Hollow bricks are added if prices are rising. Black bricks are added if prices are falling. Only one type of brick can be added per time period. Bricks are always with their corners touching and no more than one brick may occupy each chart column. It's important to note that prices may exceed the top (or bottom) of the current brick. Again, new bricks are only added when prices completely "fill" the brick. For example, for a 5-point chart, if prices rise from 98 to 102, the hollow brick that goes from 95 to 100 is added to the chart BUT the hollow brick that goes from 100 to 105 is NOT DRAWN. The Renko chart will give the impression that prices stopped at 100. It's also important to remember that Renko charts may not change for several time periods. Prices have to rise or fall "significantly" in order for bricks to be added. Interpretation Hollow bricks are bullish, black bricks are bearish - that's the simplest interpretation of Renko charts. Renko charts may be most useful in identifying trends and trend direction. Because they screen out moves that are less than the Brick size, trends are much easier to spot and follow. In order to avoid whiplash periods, some people wait unto 2 or 3 bricks appear in a new direction before taking a position. Parameters There are two ways to specify the Brick Size for a Renko chart: Absolute Points and Average True Range (ATR). In addition, you can specify whether closing prices or high/low prices are used. Absolute Points With the "Absolute Points" method, you specify the size of each brick on the chart in points. The advantage of this method is that it is very easy to understand and predict when new bricks will appear. The disadvantage is that the point value needs to be different for high priced stocks than for low priced stocks. Typically you will need to choose a value that is roughly 1/20th the average price of the stock during the time frame you want to chart. Common values include 1, 2, 4, and 10. Keep 5050 as your SL for longs. Continue to buy every dip. Tomorrow RBI will announce the rate hike - I dont think we will correct beyond 5050. -- Posted By Gautam Bajaj to Equity & Nifty - Positional Strategies at 4/19/2010 01:29:00 PM -- You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en.
