Nifty update

Nifty expectedly broke out of the falling wedge formation and has had a steep rally of almost 300 points. Now as we mentioned in our previous post, the crucial level to watch on the upside remains 5830 odd levels. However, adding another trendline gives more confirmation to this crucial zone of 5830 - 5870.
So one may safely book out their longs completely near the supply zone.

To protect this uptrend the level of 5650 has become vital and must be held on during any corrections. Nifty may oscillate in the band of 5650 - 5850 before giving further clue as the broader market has yet not fully participated in the rally. So stock specific movements can continue while Nifty may oscillate within this range before showing direction on either side.

Above the resistance band of 5830-5870, Nifty has a strong previous overhead supply zone at 5930-5970. Nifty's inability to firmly cross the first resistance band will be taken as a sign of weakness and therefore, one may create shorts in Nifty near these levels with a small stop loss near 5890 levels.


SHORT NIFTY IN ZONE OF 5830 - 5870 WITH SL AT 5897

Levels to watch : 5650, 5710 & 5830, 5870

Nifty Update

Nifty did manage to take some support at the 5500 levels as mentioned in the previous post and bounced 100+ points to 5610 before cooling off again post INFY results.

Take a look at the NIFTY chart above.
The 'Green lines' show the falling wedge being formed in Nifty with support near the 5450 area.
Now 5450 level is very important technically because
i)  it is the long term trendline support from the rally of 4500
ii) it is the lower area for the Bullish falling wedge and
iii) it is the zone of the Breakaway "Reform" Gap in place since the start of this upmove in Nifty.

So it is quite evident that 5450 remains a CRUCIAL LEVEL to be watched below which one may see a swift fall in the index.

At the moment Nifty is forming a Bullish Falling Wedge and a breakout on the upside can have 2 targets for the Nifty.
TGT 1 - 5650/ 5670 which is the 200DMA for Nifty and will offer strong resistance
TGT 2 - 5820/ 5840 which is the RED TRENDLINE RESISTANCE shown in the chart which will come into play post the falling wedge breakout in Nifty and closing above the 200DMA

Please Note that the zone of 5820 is also the 50% retracement zone for the entire fall from 6100 to 5500 in Nifty and being a Fibonacci retracement will offer strong resistance.

Therefore, 2 crucial and trend deciding levels to be watched are 5450 and 5820.

Trend for the Nifty still remains down. However considering the highly oversold territory Nifty is in one can expect a relief rally post the falling wedge breakout and wait to create fresh shorts at higher levels.

One may safely buy in 5450 - 5500 zone & then create short positions in Nifty near 5650 and 5820 zones with small stops.

Nifty Update

In our previous post we wrote :
The study of time cycle tells us that Nifty may be in the process of forming a lower top from its recent high of 6112 and thereby completing the basic Dow theory requirement. As per the time cycle study Nifty may form this lower top formation by the end of March, 2013 and resume its downtrend thereafter.

BANG ON !!!!

Nifty nose dived from March end - April from our levels of 5880 mentioned in previous post to 5500 levels giving  HUGE 400 points in a matter of less than 2 weeks and almost achieving our target of 5400.

As shown in the chart Nifty is reaching its crucial support zone levels of 5400 - 5450.
Considering the highly oversold natute of this fall coupled with positive divergence on daily charts one may expect Nifty to take support in this range. So one should book full profits in shorts and wait for some bounce back. If  Nifty manages to hold this support zone and if the positive divergence is confirmed by an upmove in prices then one may even go for a scalping long but with strict sl considering the strong momentum being witnessed on the downside.

One thing to notice is the change in Speed and Volatility in the Index. This indicates the time cylce for the index is undergoing some change.

Levels to watch :
5450, 5400 on the downside &  5530, 5650 on the upside.