Markets for 26 aug 09

On tuesday the markets behaved as if it was the expiry day. Nifty after a bout of volatility with expiry type volume within the expected band of 4582 on the lower side and 4673 on the higher side closed nearly flat at 4659 compared to mondays close of 4643.what was interesting to note was, every fall invited heavy buying interest & shorts were covered. The pin bar formed in the last hourly candle of monday played its role of bringing down nifty with a gap down open followed by the slide towards 200 hourly ema where it found solid buying support & continuously move up to breach mondays high of 4656 to reach up to 5673.

Tuesdays low around 4582 is likely to be a strong support this week. Although us markets had a pause by closing flat on monday, the china factor continued to threaten asian markets which closed in the red. With us markets having had their quota of pause on tuesday night & all set to bounce with vigor on wednesday night, one has to wait & see how asian markets behave on wednesday morning.

If one has a closer look at the hourly chart above, one will notice that nifty is confined within a upward moving channel a breach of lower band of the channel can bring it down to find support around 4600 or till tuesdays lows of 4582 levels. On the upper side it faces resistance around 4688 levels a breach of which can easily take it past 4700 levels. With the important indicator slow stochastic showing signs of weakness, unless there are solid rear guard action by the bulls early on wednesday, there is every possibility of nifty first falling towards 4600 levels to be followed up by up move as was seen on tuesday. However strong asian markets if freed from the chinese effect, can easily boost nifty to initially move up to nullify this negative indications by taking stochastic into the upper zone again.

WITH BOTH AN INSIDE & OUT SIDE RED NRB FORMED ON EITHER SIDE OF THE GREEN WRB IN THE LAST 3 HOURLY CANDLES IN THE CHART ABOVE, A BREACH OF 4673 THE HIGH OF THE WRB CAN SEE A SHARP UP MOVE & SIMILARLY A DOWN SIDE BREACH OF THE WRB AT 4633 CAN SURELY BRING NIFTY DOWN TOWARDS 4600 OR LOWER LEVELS. SINCE, ASIAN MARKETS HAD CORRECTED ON TUESDAY & INDIAN MARKETS HAD CLOSED IN THE +VE, WEDNESDAY MAY SEE A REVERSE ACTION WHEN ASIAN MARKETS MAY RISE & INDIAN MARKETS MAY REMAIN FLAT OR CLOSE WEAKER BY END OF THE DAY. IF THAT HAPPENS, THEN EXPECT NIFTY TO RETEST 4600 OR EVEN 4580 LEVELS. HOWEVER, IF ONE GOES AS PER PURE TECHNICALS, THEN THERE IS EVERY POSSIBILITY OF NIFTY TESTING 4700 OR EVEN HIGHER LEVELS ON WEDNESDAY.

DOW WHICH WAS MORE THAN 100 POINTS UP WHEN EUROPEAN MARKETS WERE TRADING, WILL FALL TO CLOSE MILDLY +VE BY END OF THE DAY AS THIS WOULD BE THE 5TH CONSECUTIVE DAY OF RISE IN DOW IF YOU COUNT WEDNESDAYS 3 POINT +VE CLOSE AS A RISE.