The 200 day average is considered to be the defining average for bulls and bears. How often have you heard the saying : Bulls live above 200 dma and bears below the 200 day?
Is this right ? Maybe.
Years back I learn’t that if you trade with a tool that everybody uses, there are more chances of it not to work, than work.The market has always rewarded the contrarian or somebody who has a different way to approach the markets.
So along with studies on Market profile I went along to find different indicators for bull bear zones over a longer time frame.I came across the EMA cross over indicator which has defined for me these zones much better. Take a look at the weekly chart of the Nifty Spot.
This is a longer term chart and plots the 13 ema over the 34 ema with a MACD thrown in for confirmation.At today’s close the red is still over the blue and the MACD still in positive territory above the zero line.
Notice the confirmations for bears in April 2008 followed by a strong move down and the reversal in April 2009 followed by the strong move up.
So all hope is not lost for the bulls. Watch this cross-over carefully.