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.
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