Nifty. August Expiry View.

NIFTY ON A DAILY RENKO CHART

The regular candle stick chart can be quite daunting in a choppy market. It could give mixed signals to the untrained eye. That is where the Renko charts come in handy. The Renko charts track the price movements and we can almost say, ignores the time element. On the chart below on the left is the normal candle stick chart and on the right is the renko chart.

Despite all the up and down of the market, a trend follower who used the renko system (with the settings I have used) would have been long in the market from 8200levels. And using two bricks to exit, would have exited during the recent fall with a neat gain of 1500 to1600 points.

BRICK SIZE IS KEY IN RENKO.

The brick size plays a big role in Renko systems. Using a fixed brick size would give a very different chart when compared to a dynamic brick size based on ATR. I have used a shorter ATR period for quicker signals, however if one were to use the regular 14 period ATR, the last brick would still be red. Anyway, most trend following systems would wait till at least 2 bricks are formed to determine a change of trend. In the current scenario, considering that the fall (based on shorter ATR Period) is just made of 3 bricks, a more conservative approach will be for the prior high to be crossed - which would also be a signal in many other systems, thereby hopefully adding momentum to the rally.

NIFTY SIGNALS FROM MY SYSTEMS

Any aggressive long positions for a trend follower using this set up on a renko chart follower would be somewhere above 10250 levels.

The regular candle stick charts with my moving average cross over system has turned positive though yet to give a buy signal. My momentum system though gave a buy signal 22nd Aug. Though I did miss this because I was not active in the market on that day.

So there you go, the lagging systems like MACO (Moving Average Cross Overs) and Renko give safer trades a bit into the move, while the momentum system gives a signal much earlier. The main advantage of the Renko Chart is that is removes the noise elements of smaller price changes and gives a very clear indication about the trend.

EXPIRY RANGE

This week is expiry week and option writers would probably put up a stiff fight should the market try to go their territory. Based on the Options data, the expiry range seems to 9800 to 9950 with support at 9700 and resistance at 10k. We are already at 9850, so maybe it could go sideways to 9900 levels as there seems to be fresh supply every time the price rallies even by a small percentage.

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Disclaimer :

This blog is for educational and awareness purpose only. The views are intended for discussion and interaction purpose rather than an expert opinion. This is not an recommendation to buy or sell or invest in the stock market and derivatives market. Kindly exercise caution and perform your own due diligence before investing in the market, after fully and clearly understanding the risks involved.