The trends

S&P broke below Wednesday's lows yesterday and is in a down trend. Most commodities did that too. So now we have Gold, Silver and Crude in a downtrend. Dollar index i.e. DXY is now in a uptrend. My definition of the trend depends on the RSI level. RSI below 50 denotes a downtrend and above 50 an uptrend. As simple as that and quite effective to trade.

These trends are not well established in the sense that they have just happened yesterday. A few more days and only then would we be more sure that the downtrend is well established. I look at a fall in the RSI to below 30 levels i.e. to oversold levels as the first sign that the downtrend is getting well establised. Until then I will still be vary of a reversal.

Coming to equities, large Asian markets like HSI, HSCEI are in a downtrend. Nifty is still in an uptrend on a end of day basis. But using hourly charts I am short the Nifty from 5100 levels and have sweated for a couple of days. If Nifty trades above 5170 then I will cut my short positions and go long. However if it trades below 5010 I will add to my short positions because the daily trend will then turn down around those levels.

This kind of note feels so bland. I really apologise for the boring stuff. I am sure you do not want to know what I think about the trends because I can always come back to you tomorrow and say that the trends have changed again!!!. Ok I got something to make this note interesting. My daughter asked me this question. Why is 6 afraid of 7?. Let me know.