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Charts & Analysis

Tech Gloat: Nifty Falls to Lower Bollinger Band, Is Airtel Setting Up too?

I wrote in a tech note on July 29 that multiple indicators point to a fall in the Nifty. Two very powerful ones seem to be an Bollinger Band rejection along with a MACD crossover. Here’s the Nifty chart I drew then:

Nifty July 29 chart

The Nifty has lost steam and hit the lower band hard, with the index falling over 2% today (August 6) for a fall to 5542, from the post level of 5886. This is a fall of 344 points.

image

So I’m going to feel good that this turned out okay..

Choosing the wrong instrument to trade can be a problem. I chose options to trade this and off the 344 I must have recognized just 150 points in the trade. My risk was lower, but a straight future short would have done better.

This pattern is looking like a powerful downswing trade pattern. The MACD cross with an upper bollinger hit seems to have worked with two other stocks apart from the Nifty. See Reliance Capital:

RELCAPITAL chart

and Bharti Airtel, just today:

Bharti Airtel Chart

There are no targets, of course. And it’s easy to confuse just three good trades with a strategy. Must backtest, but that will have to wait for another day.