Nifty Trading Using Pring KST Buy Sell Signal

KST Indicator (Know Sure Thing) developed by Martin Pring is a powerful Time indicator.

KST indicator takes summation of multiple Rate of Change (ROC) together and smoothens it using an average. The signal line which is again an average of KST is plotted to get Buy and Sell signals.

Nifty Daily chart with Pring KST

Above Nifty daily chart shows important tops have been accompanied by turn in KST indicator. Do note that KST (green) moving below the signal (red) line does not always lead to lower prices. We can see that happening during the rise of October 2021 where KST was falling below the signal line but prices showed sharp move on upside.

Price Action with KST – It is therefore important to combine price action along with any indicator. KST is a Time indicator which is very smooth as against ROC applied directly. It does indicate that trend can possibly reverse and it is time to be alert. We can see that all the tops of Nifty over past year has been accompanied by the KST crossing below the signal line and so one can then devise a strategy to short the market on pullbacks unless KST moves back above the signal line. Shorter time frames can be combined along with daily for timing the entries.

In a nutshell, Nifty daily KST is still in buy mode whereas hourly and smaller time frames entered sell. So, during such scenario Options selling can work better. When daily KST moves below signal line followed by 0 line there can be a great opportunity to keep using smaller time frames for sell signals to trade the major trend.

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