It’s very easy to get caught up in the day to day noise of the market, especially if you’re allowing toxic media content into your life. It’s virtually impossible for us to completely ignore it all, although I do try my best. So, at the very least, we want to be aware of what type of content we’re consuming and the conflicts of interest that are driving it. But another, and much easier way to avoid getting lost is simply by taking a step back. Monthly charts allow us to see the forest through the trees and is one of the most valuable parts of my entire process.
Even if you’re a day trader or short-term swing trader, I think it’s a huge advantage to understand the direction of the underlying trends. For me, who specifically looks out weeks and months, trying to make money this quarter, my monthly candlestick chart review is essential. I can’t begin to tell you how much this has helped me avoid blindly calling tops or bottom fishing in never ending downtrends. It most certainly helps us err in the direction of the underlying trends which, of course, increases our probabilities of success.
We’ll start with the Nifty 50 which has been the strongest of the group as large caps continue to outperform their mid and small-cap counterparts. Prices hit our target near 11,165 in January and have been consolidating since. The uptrend remains intact, however, a neutral approach is best until we’re above that level as a breach of support at 10,100 leaves prices vulnerable to further downside.
Click on the chart to enlarge view. [Read more…]