AbhayDM

I found there are more than one interpretation in case of standard indicators, So I was looking for indicators which will pinpoint the decision making signals. In the process, I had designed a set of indicators viz Abhi Momentum Indicator and ZEWS.

1. Abhi Momentum Indicator: This indicator uses the price change over period and tries to find the momentum. It contains two lines, the red one here represents medium term and green line represent short term indicator. In both the cases, if the indicator moves up from the down side, it is the signal for end of downtrend. If the indicator crosses the zero line, it indicates the uptrend in the security and vice-a-versa.
Wait till the medium term indicator gives you positive signal which means market will be in uptrend. Then look out for signal by the short term indicator. That will be your entry signal. The exit signal will be when medium term as well as short term indicator gives you sell signal.
On this site, I am using 5 and 27 period for short and medium indicators respectively.

2. ZEWS: Since I used Zero-lagging TEMA in this indicator and in my opinion it is sort of Early Warning System. Hence, the name.
Although parameters I used here are 9 and 14, it can clearly be seen, it gives longer term view than Abhi Momentum Indicator whose parameter are 27 period. Again the interpretation is same as above.

3. ZLTEMA: Three overlays could be seen. These are 27 period EMA, 27 period Zero-lagging TEMA and 14 period Zero-lagging TEMA. I use 27 period EMA for reference, not for trading signals or support etc. while crossovers of TEMAs could be used as trading signals, but that will be purely on long term basis. This is not the indicator designed by me.

The logic of the system: The market is constantly in the process of valuation as it keep changing the value. The transit from one value to other is not a smooth process as there are factors which would affect the trend. While keeping eye on the primary or longer term trend, one should use the short term trend for ones entry or exit.

ZEWS is still in the downward direction though bending slightly indicating continuation of the downtrend.

Medium term AMI is still in the downward direction which indicates the market is still in the downtrend.

Short term AMI is moving upward. The upward movement of short term AMI was started from the last week of the May 2008 but the market is sliding despite its upward movement. Now, the STAMI is on the verge of crossing zero line.

The key to market movement is the support line at 4000. If the market holds this support line in the next week, then the market should be in lateral  movement showing signs of improvements.

Disclaimer: I trade in Nifty  for very short period, ranging from few hours to 2/3 days. Hence, the position depends on the market condition at that moment.