Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

Nifty Futures shows a Highly Emotional Market

41 sec read

Nifty likely to open gap up today around 9940 levels which is perfectly normal for a bull market sentiment. But then historical charts shows increased risk on long holdings as Nifty Futures have 10 unfaded gaps in 2017 alone and 12 unfaded gaps since 2016 which indicates that new buyers are coming up at every gap up scenarios and every pullbacks. Street is now anticipating 10,000 the psychological 5-Digit magical figure.

refernce lines indicates unfaded gaps since Mar 2016.

What I can learn from Exponential Gaps

Exponential Gaps indicates momentum buyers are piling on to the trade at every gap ups. Animal Spirits lifts the market higher and higher thereby creating a euphoric environment. Too many animal spirits are dangerous for the trend persistence and the reversal odds are high.

Why does that Matters?

From a traders perspective it makes a little sense but it matters a lot from a short term or medium term investors perspective. An Emotional Buyers market is sort of overbought market where an short term/medium term investor rarely benefit in the given scenario. statistically, the odds of closing the gaps favor a lot. Chasing the trend as current junction might not be a wise decision though.

Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

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