Markets for 05 aug 09

Well the expected downward correction towards the earlier rectangular channel took place and after liquidating weaker hands,towards end of the day, nifty bounced back this time from the 21 hour ema, the earlier two days had seen nifty bounce back from 13 hour ema. On tuesday, the median line of the andrews pitchfork marked in blue line in chart below also provided strong support to nifty for a sharp bounce back upto the pivot level towards the end. Even if nifty slips again with low volume on wednesday induced by weak us markets overnight or low volume sgx nifty as had happened on tuesday, it should not at all bring worry for the long holders as a correction till 4613 till 4600 where 55 ema is there or even into the fridays gap zone till 4588 is quite possible and can be expected. However if at all nifty comes to these levels, it will offer great buying opportunity.

If one has a closer look at the hourly chart below, one will notice that, slow stochastic has come down below 50% zone and there is a possibility that it may test the lower zone that will rebound it upwards from nifty levels of 4600 to 4588 levels. In any case closing support area around 4650 to 4630 should finally come to the rescue of nifty by close of the day. However should the indicator without going further down turns up from this middle zone it will again impart a sharp up move towards 4747 nifty levels.

Secondly, in the chart below, the intraday correction on tuesday has brought nifty to be housed in another downward slopping rectangle with resistance around 4700 & gradual intraday support around 4626.nifty may find initial support around the median line around 4650 levels. A decisive breach of this median line support around 4650 can bring down nifty towards 4626 or 55 ema around 4600 levels for a sharp bounce. On the higher side, a decisive breach of the resistance around 4700 & more importantly 4717 can see another rocket type move induced by short covering that can take nifty towards 4750 or higher levels. So, all in all one should expect another volatile but range bound day with a flat or mildly bearish out look for wednesday. After the expected pause is over, one can see a sharp break out up move.