RSI AND BOLLINGER BANDS ON NIFTY

Nifty Monthly : On monthly chart the Bollinger Bands depicts  the price action. The yellow line is first standard deviation, green line is second std. deviation and central yellow line is the 20 simple moving average. The trend is down as the price action is below the 20 SMA.As per Bollinger bands the price has been supported at the SD-2 level of 4750.The price after being supported at that level has consolidated and has moved to the SD-1 level of 5149.10.Expect some resistance here or gap up will take it out smoothly.

RSI Monthly ; RSI is used to time the price action. Classically RSI above 80(overbought) is used to short or sell and below 20(oversold) level is used to long or buy.RSI and similar indicators can remain overbought and oversold at times leading to wrong decisions.

                         RSI can be used to time trades by plotting 20-40-60-80 levels on it.

Uptrend  40 – 80,strong uptrend 60 – 80.Downtrend  60 – 20,strong downtrend 40 – 20.Sideways 40–60.

Conclusion : Monthly RSI value is 41.6947 so the trend is sideways and next resistance can be 60 level if 40 is not breached. Also we are nearing the SD-1 level of 5149.10.So some resistance is expected. If this level is crossed we may move to the 20 SMA level of 5500.60on sustained move with volumes. Also watch the trendline support and resistance on RSI and the breakout which gave this move,which is nearly coinciding with 20 levels on RSI(actual 22.64).

 

Nifty Weekly : Bollinger Band Sd-2 level = 4638.40,SD-1 level = 4937.90 and 20 SMA level = 5253.80.

As the price is below the 20 SMA level the trend is down on weekly chart. The price had moved below to SD-2 level and crossed above it from bottom at 4846.70.One could have brought at that level and sold at SD-1 level of 5026.40 on breaking of it downwards(180 points profit).Again on crossing of SD-1 level of 4938 was entry point and is hold till now(200 points profit).as the weekly candle is still green with no upper shadow. Ideal target for this trade is 20 SMA at 5253.90 on weekly chart with suitable trailing stop loss(which may come or not need to be watched).

RSI weekly : Weekly RSI bottomed at 3.9836 corresponding to a low of 4716.30(my software may sho different levels please correlate it).

Entry point 1 = Crossover of RSI 20 level

Entry point 2 (Add position) = Crossover of RSI 40 level( trail suitably)

Booking profit for both position = Resistance of RSI 60 level or break of it on downside.

Reverse trade at RSI 60 resistance could be booked at RSI 40 level.

Current move entry 1(RSI 40) and add(RSI 60) and ideal resistance at RSI 80 level(watch carefully).

Conclusion ; Bollinger Bands show resistance at 5253.80 on crossover of 5180 level.On RSi look for resistance at 80 levels. Also channel shows we are in the positive zone with centre line at 5069 and channel top at 5540 level. Also SD+1 level above 20 SMA shows 5536.40.

 

Nifty Daily : Bollinger Bands Sd-2 level = 4719.10,SD-1 level = 4837,20 SMA level = 4959.30,

SD+1 level = 5081.50,Sd+2 level = 5203.70. Daily trend is up and near the Sd+2 levels of 5203.70.Observe the supports at Sd+1 level of 5081.50(twice).

RSI Daily : Currently we are at the resistance levl of RSI 80 and flirting with it with a close at 78.92.Above 80 on RSI will strengthen the move and below it will weaken it and can be used to time the trades.

 

Conclusion : On daily charts we are nearing the resistance of 5203.70.RSi is flirting with 80 levels.So we need to be cautious. Supports at 5081(SD+1 level) and RSI 60 level if we move down from here on the daily charts.

 

Nifty hourly : As we are above the 20 SMA of 5089.90 the trend is up. Also above SD+1 level of 5123.50 could  target the  SD+2 level of 5157.10.

RSI hourly : Again here we are flirting with 80 level. Above 80 will strengthen the move and below it will weaken. Need to be cautious and take action as per Monday’s hourly movement. Also we are above the channel resistance of 5135.15 which needs to be watched as by dropping in the channel again the momentum will be lost.

Happy Trading !