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Nifty Update

Bearish Bat Pattern

Nifty is forming a bearish bat pattern on the daily charts. Take a look at the charts.
This can be quite significant considering the strength  shown by the world markets and all asset classes in the previous week. Therefore, if Nifty does not rise above the 5350 levels convincingly then we can assume this to be a sucker rally thereby showing the underlying weakness and the impending fall.


Short Nifty at current level of 5300.
Targets on the downside for Nifty are 4620 and then 4300.
Stop loss remains at 5370.



Lets take a look at various other asset classes which saw an uptick together with the global markets last week. Was it the start of a fresh rally or just a sharp bear market retracement???



BRENT CRUDE

Brent Crude is trading well below its 200 and 50 day moving averages. Till it  does not cross these averages a sustained upmove in crude looks difficult. The uptick in crude may well just be a retracement rally to the sharp fall it has seen in past few weeks.

Outlook : Weak

GOLD SPOT

Alot of people out on the street who are bullish on the yellow metal should have a look at this chart. After being comfortably above the 200 and 50 day moving average at the start of the year, gold has struggled to break past through the 200 dma barometer. Till it does not take out these averages comfortably, we may well see gold heading downwards.

Outlook : Weak

SILVER SPOT

Silver in a pre-emptive move has already shown the path ahead for gold. Silver is trading well below both the  
averages and will continue to be weak.

Outlook : Weak

USD / INR

This needs no words, the chart says it  all. Usd / inr  looks to be in a strong bull market and the strength is quite evident from the charts. Despite the biggest one day rise recorded by the rupee in the last 3 years, it is still trading comfortably above its 200 dma and one may expect to take support near its 50dma at 55 levels.
The clear thing is that the strength in usd / inr only indicates the underlying weakness in the indian markets and a big fall may be around the corner.

Outlook : Strong

Nifty Update

Fibonacci numbers and strategies are widely known and  have long been used in the market with effective results. Fibonacci projections and retracements work on a basic set such as the

23%, 38%, 50%, 61.8%, and 80%.

These are widely used in retracements and can be used in projections as well.
Fibonacci fan and arc charts use these numbers in conjunction with angles and slopes and can be quite a useful tool to "objectively" see through various price levels.

Here are 3 Nifty charts with varying origin points and time periods along with their Fibonacci support and resistance points. Lets have a look at them.


CHART 1 - A Medium Term Fibonacci Fan Chart

This is a Fibonacci Fan with  the recent low of 4500 as the origin point. It gives various projection lines showing medium term support and resistances based on Fibonnaci retracements of 23.6%, 38.2%, 50%, 61.8%, 78.6% and 100%.
As one can see the immediate support line comes near 5050 levels and the resistance line comes near 5550 level. Markets are currently gyrating between this broad range after the recent high near 5630 levels.

Support : 5050      
Resistance :  5550



CHART 2 -  A Short Term Fibonacci Fan Chart

This is a shorter term Fibonacci Fan with the recent top near 5630 as its point of origin.

Support :  5100   
Resistance :  5330



CHART 3 - A Short Term Fibonacci Arc Chart

This is a Fibonacci Arc chart with the developing support trend line as the point of origin.

Support : 5050   
Resistance : 5280, 5370, 5550, 5750



In the short term cluster support comes in at 5050-5100 and cluster resistance comes in at 5330-5370

In the medium term support comes in at 5000 - 5050 and resistance comes in at 5550.

One can keep these points in mind for the short term and the medium term respectively.
A sustained break of these cluster points will be a good indicator of change in trend and momentum.

Global Update

Hi Guys,
              Lets look at a few of the asset classes apart from equities before looking at the Nifty Chart and see how they are faring currently. Looking at different asset classes is a good way of getting an alternate perspective into things.


GOLD CHART

Spot Gold Prices after having formed a double top near $1790 have fallen by almost 10% to its current level of $1620. Gold prices continue to remain below their 200 day EMA and are expected to remain weak going forward after being dubbed a "Dead Asset" by countries world over.

           



SILVER CHART

Silver prices continue to remain weak and have fallen nearly by 15% from 37$/ounce to 31$. Silver prices continued their range bound movement  below the 200day EMA which lies at 33$. The outlook remains weak till silver prices can sustain above those levels.

WTI CRUDE

WTI Crude prices after having seen a good upmove have fallen by 8% in the recent time to sub 102 levels. However the prices continue to remain above the 98$ mark wherein lies the 200 day EMA. One can expect Crude prices to remain firm till those levels are held. Any sustained trading below the 98$ mark may considerably weaken crude prices.

USD/ INR

USD/ INR after having tested its support zone at the 200day  EMA of 48.50 have rallied by almost 8% to 51 level.  USD/INR prices are expected to exhibit more upside going forward. This in a way spells trouble for the Indian Equity markets which may show weakness on the continuing show of strength by the$.

US Treasury (10 Year US Treasury Note Price)

US Treasury prices have largely remained range bound over the recent time and is currently resting at it's support level of 200 day SMA. Holding these levels, one can expect the yields to soften on the US 10 year  Treasury note.

A First look at  things will show you that practically all asset classes have witnessed some kind of selling whereas the $ has gained in strength in the past  few weeks. One should be cautious going forward as this can be taken as Money or Liquidity Distribution and may be a sign of a Global Asset SELL OFF. One should keep a keen eye on these going  forward.




In the meantime our sell call on Nifty stands. Nifty has respected the level of 5750 has not managed to breach it. Timewise, i expect the Nifty to be rangebound between 5000 and 5400 for some more time before making the decisive move downards towards our target of 4200.

As per the above chart our Stop loss stands at 5750. Nifty is currently moving in a channel with channel support and the Fibonacci arc support at 5000 levels. This is a shorter term view for the Nifty. The arrow depicts that the break of 5000 will lead us into the lower orbit  towards  4400 - 4500. As long as 4950 - 5000 holds we can expect the Nifty to not break down and oscillate between the 5000 - 5400 range. The longer term view of Nifty  however remains bearish with targets of 4200.

Nifty Update

Hey Guys....
 Posting after a long sabbatical due to time constraints. Will keep posting more frequently now. Lets get straight to the point and talk market. The main reason to come back and post is due to this all important and crucial juncture the Nifty is currently at. It's make or break time for Nifty.

I say it's MAKE and then BREAK (the chart says it all)  :) Let's see in brief why.....

Nifty is in it's most interesting and crucial phase at this moment and juncture. Nifty has rallied from 4500 levels straight to 5150 levels, turning alot of people bullish.

The above chart explains and shows that Nifty is at its most important cluster resistance of 5170 - 5180 and the trendline resistance it has been facing right from 6300 levels. (please note that this trendline resistance is even present on a weekly basis for the Nifty. That makes it twice more important and significant)

Although there has been a false breakout a couple of times from the trendline, everytime it has happened Nifty has seen a decent cut off. THIS TIME IT MAY BE DIFFERENT!!!
 (look at the FII figures. The pace and strength of cash numbers definitely suggests of a breakout)

So the question remains, will Nifty give a breakout from it's all important resistance or will it respect it's cluster resistance and start it's downward journey again???

Well, there are a few factors to be considered.
1. Nifty has rallied almost 700 points and is extremely overbought even on a weekly basis. So the rally can exhaust at current levels. However, considering the strength of the cash being pumped in by FII's, we may see a break of this trendline and resistance this time and target the 200 day MA and beyond towards it's next resistance of 5400 - 5500.
2. Concerns are looming and flashing everyone in the eyes of a possible Greece default which may cause tremors in the global equity markets. A rally before the outcome of the news may have set  the stage for a big fall and cut in the global markets. A conclusive outcome may only happen near 20th March, 2012 though when the time comes for Greece to repay it's bondholders.
3. India VIX and the CBOE VIX are trading at relatively low levels and are quite oversold, leaving little space for them to drop further and thus for the markets to rally
4. The $ has retraced its stupendous rise and appreciation against  the Rupee to 50. 49 - 49.20level is a strong support for the $ against the Rupee. The continuation of uptrend in the dollar will put pressure on the indian equity markets.
5. Nifty might possibly be retracing it's fall from 5750 levels and till it does not cross the previous top of 5750  convincingly, it is difficult to digest such a fuelled rally on no extraordinary positive news. Therefore, this may only be a retracement of the previous fall and not start of a new rally.

Nifty is setting the perfect stage to CRASH!!!

An early signal will be Nifty's break of 5100 (this level will rise to 5150 - 5160 level in the coming week) and it's inability to sustain the so called conquered level in the new Feb series. We may however, see Nifty going past 5200 and more towards the 80% retracement of 5450 - 5500 before any weakness creeps in. (I am considering the far end of the retracement at 80% after looking at the way  FII's have pumped in money. Therefore that way it remains a low risk - high reward trade)

MY VIEW : Short Nifty after it gives a false break out from this resistance and closes beyond the bullish indicator of 200day MA in it's previous resistance region of 5450 - 5500 and roughly 80% retracement level of the fall from 5750. Lowest risk-reward ratio if it reaches there

THE TRADE : Short Nifty March between 5450 - 5500 with sl of 5750 and target of 4200.

Risk : 300 points
Reward : 1200 points

Risk :  Reward ratio of  1:4