SBI is one of the most actively traded stocks in derivatives.
Below is the 3d, 15d, 34d & 100d EMA chart of SBI for Futures and Options traders.
This Strategy is highly inspired by the concept of 'Market Reversion to mean'.

Reversion to Mean rules
  • Price has to revert to 3 EMA within a maximum of 3 days before it goes anywhere else.
  • Price has to revert to 15 EMA within a maximum of 6 weeks before it goes anywhere else.
  • Price has to revert to 34 EMA within a maximum of 16-18 weeks (4 months) before it goes anywhere else.
  • Price has to revert to 100 EMA within a maximum of 28 weeks before it goes anywhere else (7 months).


How to apply the above rules in Trading

Short Term Bull Strategy
  • When the 3 day EMA cuts above the 15 day EMA, buy or go long on SBI.
  • When the 3 day EMA is above the 15 day EMA for a week, its time to exit SBI positions (book profits).
Short Term Bear Strategy
  • When the 3 day EMA cuts below the 15 day EMA, sell or go short on SBI.
  • When the 3 day EMA is below the 15 day EMA for a week, its time to exit SBI positions (book profits).

Long Term Strategy
  • When the 3 day EMA cuts above all three EMA's (15 day, 34 day & 100 day), its a strong bullish signal. Buy SBI on dips. 3 day EMA will normally break below 15 day EMA 3rd time. Avoid going bullish 3rd time, when 3d EMA comes DOWN towards 15d EMA as SBI will most probably correct on trend change the third time.
  • When the 3 day EMA cuts below all three EMA's (15 day, 34 day & 100 day), its a strong bearish signal. Sell SBI on rises. 3 day EMA will normally break above 15 day EMA 3rd time. Avoid going bearish 3rd time, when 3d EMA goes UP towards 15d EMA as SBI will most probably rally on trend change the third time.

Let me know if the above strategy works for you.

Cheers !