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Market Health

Overview

  • Before we start trading, it's crucial to analyze the overall market conditions to check if the market is in a favorable state for trading.

Index Analysis

  • We need to make sure that major indices like Nifty and Smallcap index are in an uptrend and showing strength.
  • Moving averages for 10/21/50 must be in the correct order (10 > 21 > 50) and the price should be above these moving averages to confirm a strong uptrend.
  • We should also look for signs of strength in the indices, such as higher highs and higher lows, to confirm that the market is in a bullish phase.

Market Breadth

  • Market breadth must be above 50% for 10/21 Day at start of uptrend
  • All 10/21/50 day breadth must be above 80% for healthy market conditions.

Net new Highs vs Lows

  • Must be positive for last 3-4 days to confirm that the market is in a strong uptrend.