NIFTY50 || RSI positive divergence As mention in my previous idea, the recent rally was indeed a 'Dead Cat Bounce' as NIFTY50 has experienced another significant drop. However, examining the charts above reveals positive RSI divergence in both the 2-hour timeframe (TF) and the daily timeframe (DTF), with NIFTY reversing from a marked support zone.
For the next bull run to be confirmed, NIFTY should hold above today’s low and meet the following two criteria:
1. The index begins trading above the 20 EMA band.
2. The RSI surpasses the 70 mark.
This setup could indicate a more sustainable upward trend if both conditions are fulfilled.
Disclaimer: This analysis is for informational purposes only and should not be considered as financial advice. Trading involves significant risk, and it’s essential to perform your own research or consult a financial advisor before making any investment decisions.
Essential principles for traders:
1. Be Disciplined, Avoid FOMO: Maintain a disciplined approach to avoid impulsive decisions based on the "fear of missing out" (FOMO), which can lead to risky trades.
2. Risk and Reward Management: Always assess potential rewards relative to risks before entering a trade. Proper risk management ensures long-term success by limiting losses on any single trade.
3. Follow Stop Losses: Calculate and set a stop loss for every trade to protect against significant losses. Make it a habit to adhere to it without exception, even if the market seems to be in your favor.
4. Journal Your Trades: Maintain a trading journal to track decisions, wins, and losses. Analyzing past trades can help improve future strategies and identify patterns in behavior or biases.
5. Master One Strategy Before Expanding: It’s beneficial to focus on mastering a single trading strategy before exploring others. Once consistent, you can broaden your approach to diversify risk and opportunities.
6. Control Emotions: Emotions, especially greed and fear, can cloud judgment. Cultivating a mindset that balances confidence and caution is key to maintaining objectivity.
