Markets for 27 aug 09

On wednesday, nse index in spite of all the push to reach 4700 levels, failed to touch it on 3 attempts and could just manage to reach till 4698. However both the august and the sept futures could manage to cross 4700 levels but closed below it. Now everyone is waiting for the expiry day to see whether nifty closes above the 4700 mark or surprises every one by operators action to pull down nifty out of the blue towards 4600 levels. Based on pure technicals, nifty is all set for a mega rise in coming days. Whether the sharp up move comes on expiry day which comes after 5 consecutive days of up days or may come after a pause or mild correction has to be seen. A cross over and sustaining above 4th aug highs of 16002 & 4731 can see a very sharp up move in indices which most likely may come around early september.

If one has a closer look at the hourly chart above , important indicator slow stochastic is giving negative divergence . Interestingly the same negative divergence by the same indicator was observed yesterday also where indices are moving higher but the indicator is failing to make new highs. But the days around expiry being fully under the control of operators, such deceptive indications are part & parcel of the operators game plan. As long as nifty does not fall to breach 4656 to 4636 zone, it will move up & up only. A decisive breach of 4636 with volume can only spell danger for bigger falls towards sub 4600 levels.

Andrews pitchforks median line in blue in the chart above now has gone above 4700 levels and will slowly & gradually pull nifty towards it. The lower fork now around 4600 levels will provide the required support for nifty in coming days. In the daily eod charts daily macd & cci are indicating sharp up moves that may perhaps come after the expiry

Chart for 27thaugust 2009

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.

Chart for 26th August 2009

Markets for 25 aug 09

The markets did more than it was expected out of them. Nifty has decisively crossed both 50 dma at 4400 & now 20 dma at 4537 and also on monday it breached and closed above 4619,the b wave of the abc correction from the high of 4731 till the low of 4353.generally when the upward thrust crosses the top of the b wave of the previous correction it generally moves up to shoot past the previous high as a new up wave. So with a little bit of pause here & there one should generally expect nifty to shoot past the 4th aug high of 4731 to much higher levels in coming days with the expiry posing as a minor hindrance to the up move past 4731.

As per pure technicals, the markets look extremely bullish having closed above the neck line of the larger w formation with the base around 4350 levels and neck line around 4619 levels which over a period of couple of days should take nifty up by 270 points from the neck line towards 4890 levels if not before te expiry, certainly within a few days after the expiry. The neck line around 4620 levels will now be a support to invite buying interest. The 3 months of flat type consolidation after the election verdict spurt looks to be over and in all probabilities one can see nifty testing 5000 levels in september. With andrews pitch fork median line moving up day by day , it will attract nifty towards it now around 4700+ levels very soon and if things things move as they are now, purely based on technicals, one should not be surprised to see an expiry around 4700+ levels on the coming thursday

FOR INTRADAY TRADING ON TUESDAY, NIFTY HAS STRONG SUPPORT AROUND 4600 TO 4590 LEVELS THAT MAY INVITE GOOD BUYING INTEREST. ON THE HIGHER SIDE, IT MAY FIND INITIAL RESISTANCE AROUND MONDAYS HIGH OF 4656 & THEN 4680 LEVELS, ABOVE WHICH IT MAY JUST TRY TO SNEAK INTO 4700 LEVELS THAT MAY INVITE HEAVY PROFIT BOOKING. US MARKETS AFTER 4 CONSECUTIVE DAYS OF RISE HAS PAUSED FOR A DAY OR TWO TO SHOOT UP AGAIN AFTER THE PAUSE.

Chart for 25th August 2009

Markets for 24 aug 09

The expiry week opens with the back drop of bullish break out in the us markets on friday night and also a last hour bullish break out in the nifty above the resistance of 4495 to reach 4539.on the basis of pure technicals, the markets certainly look extremely bullish for monday & should at least take nifty towards 4595 to 4600 levels if there are no nasty surprises from asian markets. The reverse h&s formation as you see in the chart above can take nifty by at least 140 points from the break out point of 4495 towards the target of 4636 in next 1 or 2 days with the major resistance of 4619 posing a threat for some time.

For intraday trading on monday, with bullish asian opening, expect a gap up open around 4555 to 4568 levels followed by the as usual marking time in a flat range for 1 or 2 hours before deciding further course of action. In case of nasty surprise from asian markets, nifty finds strong support around 4509 followed by 4494 and finally 4469 that will bring in strong buying interest. On the higher side nifty faces initial resistance around 4555 followed by 4569. A decisive breach and sustaining over 4569 can take nifty towards 4595 or even 4619 which is quite possible if asian markets & sgx nifty do not play the spoil sports at the beginning. A decisive close above 20 dma around 4540 can add further strength to nifty for another big rise in coming days.

As per the chart above, andrew pitchfork median line (marked in blue) goes around 4640 to 4650. Nifty having successfully taken support at the lower fork around 4400+ levels should generally eye for testing the upwards moving median line around 4600 to 4650 levels shortly. Long term investors should keep on accumulating for good gains in the long term. Swing traders now may continue to hold their longs with a close below 4353 to 4333 as their quitting point.

Although us markets have had a consecutive 4th day of rise on friday and are ripe for a pause that may induce asian operators to take advance action on monday, yet the markets definitely are in for some more up move this week. With s&p500 having shown some sort of a break out momentum on friday, there is every possibility of some more up move in us markets in coming days after the expected pause that may induce a bullish momentum in other asian as well as indian markets in coming days.

Markets for 21 aug 09

POSITIVE OVERNIGHT DOW COUPLED WITH STRONG ASIAN MARKETS INDUCED A GAP UP BULLISH OPENING FOR INDIAN MARKETS. NIFTY OPENED GAP UP HIGH ABOVE 4460 LEVELS AND REMAINED IN THE BAND OF 4485 TO 4455 FOR MOST OF THE TIME . A SPURT TOWARDS LATER HALF TO REACH TUESDAYS HIGHS OF 4494 INVITED HEAVY PROFIT BOOKING AND FINALLY NIFTY FELL TO 4444 LEVELS TO CLOSE AROUND THE LOWEST TRADING POINT OF THE DAY THAT EASILY SIGNIFY ANOTHER RISE ON FRIDAY AT LEAST AT THE START. AFTER THE GAP UP OPEN THERE WERE HARDLY ANY TRADING OPPORTUNITY IN STOCKS TOO. FUTURES & OPTIONS REMAINED SUBDUED AFTER THE GAP UP OPEN AND ONLY CARRIED OVER POSITIONS COULD BOOK ANY PROFIT.

SINCE LAST 4 TRADING DAYS NIFTY HAS SUCCESSFULLY MANAGED TO CLOSE ABOVE THE CRITICAL 50 DMA WHICH IS A BULLISH SIGN THAT WILL BE CONFIRMED ON A DECISIVE CLOSE ABOVE THE 20 DMA AROUND 4545 LEVELS. THE RISE ON THURSDAY HAS GENERATED THE HOPES OF FURTHER REVIVAL IN THE MARKETS AS THE INDICATORS IN THE DAILY EOD CHARTS HAVE JUST STARTED TO LOOK UP AND ANOTHER UP MOVE ON FRIDAY CAN GENERATE THE HOPE OF A BULLISH COMING WEEK.

LAST WEEK ENDING 14TH AUGUST, NIFTY HAD A WEEKLY CLOSING AROUND 4580 LEVELS. SO, THERE IS EVERY POSSIBILITY OF A BOUNCE ON FRIDAY TO AT LEAST MOVE NEARER TO PREVIOUS WEEKS CLOSING LEVELS ALTHOUGH 4515 MAY BE A STRONG CLOSING RESISTANCE. IN THE INTRADAY CHART ABOVE, NIFTY FACES IMMEDIATE RESISTANCE AROUND 4494 LEVELS AND A DECISIVE CROSS OVER OF THIS CRITICAL LEVEL CAN CATAPULT IT TOWARDS 4525 TO 4535 LEVELS WHERE IT MEETS ANOTHER RESISTANCE LINE. IT HAS A STRONG SUPPORT AROUND 4444 TO 4440 LEVELS, A DECISIVE BREACH OF WHICH CAN SURELY WEAKEN NIFTY FOR ANOTHER INTRADAY PLUNGE. INTRADAY INDICATOR SLOW STOCHASTIC ALTHOUGH DROOPING DOWNWARDS BELOW THE 80% ZONE DUE TO THE LAST HOUR FALL IN NIFTY, HOWEVER WITH ANOTHER SHARP UP MOVE AT THE START IT MAY TAKE UPWARD TURN TO GIVE BULLISH INDICATION.

THE CHART PATTERN FORMED DURING LAST 5 TRADING DAYS HAS CERTAIN DISTINCT FEATURES. FIRSTLY IT HAS BEEN ABLE TO SUCCESSFULLY PROTECT THE CRITICAL SUPPORT AROUND 4350 LEVELS THUS MAKING IT A STRONG BOTTOM FOR REMAINING DAYS OF AUGUST. SECONDLY BETWEEN 18TH AND 20 AUGUST IT HAS MADE A SOME SORT OF W FORMATION WITH BREAK OUT LINE AROUND 4494 TO 4500 LEVELS. SO, A DECISIVE BREAK OUT WITH VOLUME ABOVE THE RESISTANCE LINE AT 4500 CAN EASILY TAKE NIFTY TOWARDS 4600+ LEVELS EVEN SURPASSING THE RESISTANCE LINE AT 4530. MOST LIKELY RELIANCE INDUSTRIES WHICH HAS BEEN TAKEN DOWN IN A WELL PLANNED & COORDINATED MANNER TO THREATEN ITS CRITICAL SUPPORT AT 1870, MAY BOUNCE UP WITH VIGOR & RENEWED VITALITY TO PROVIDE THAT REQUIRED IMPETUS TO NIFTY TO BREAK OUT OF 4500 LEVELS IF NOT THIS WEEK, CERTAINLY IT MAY COME TOWARDS LATER DAYS OF AUGUST MONTH MAY BE AFTER THE EXPIRY, THE DAYS TILL EXPIRY BEING RANGE BOUND TO HARASS THE OPTION BUYERS AND REWARD THE OPTION WRITERS.

FOR FRIDAYS TRADING, A DECISIVE DOWN SIDE BREACH OF 4440 MAY PLEASE THE BEARS TO SEE THE OPENING GAP OF THURSDAY GETTING FILLED TILL 4400 LEVELS AND A DECISIVE UPSIDE BREACH OF 4500 MAY PLEASE THE BULLS WHO CAN HOPE TO SEE 4535 TO 4550 LEVELS. A RANGE BOUND MOVE BETWEEN 444O TO 4500 MAY PLEASE THE OPTION WRITERS WHO DESPERATELY NEED MORE RANGE BOUND & FLAT MARKET TILL EXPIRY TO POCKET THE WRITTEN OPTION PREMIUM.

Markets for 20 aug 09

Again the critical level at 4350 to 4360 was protected by nifty in spite of dow future remaining 85 points negative during trading hours of indian markets. Markets continued to slide from the start but were highly volatile during the second half of the day. Most likely the the support around 4350 will be held as asian markets are ready for a good bounce on thursday.

For trading on thursday, critical level at 4430 will play a major role and if nifty is able to cross that level and sustain above it, then a sharp up move towards 4480 to 4490 can be seen. However failure to cross and sustain above 4430 can again pull down nifty towards retest of critical make or break level at 4350. Most likely 4350 will be protected this week after a minor breach to liquidate weaker hands.

Although daily indicators continue to become weak day by day, if one has a look at the hourly chart above, slow stochastic has bounced up from the lower zone indicating some up move on thursday. A +ve divergence in it also adds strength to nifty. As per short term andrew pitch fork indicator marked in blue, nifty has taken support at the lower fork and is ready for a bounce towards the median line. So, with ok asian cues in the morning, one can see a good bounce in nifty at least at the start to try to cross 4430 levels after which only further movement can be decided. Chinese index having slipped badly is ripe for a bounce so also hong kong index. However a big fall & a decisive breach of the make or break support at 4350 can signal a much bigger fall for nifty towards 4320 and then sub 4300 levels towards 4229 which may perhaps come next week
FOR INTRADAY TRADING ON THURSDAY, NSE INDEX HAS A VERY STRONG SUPPORT AROUND 4375 A BREACH OF WHICH MAY BRING IT DOWN TO 4355 TO 4350 WHICH SHOULD AGAIN SEE A GOOD BOUNCE. ON THE HIGHER SIDE 4412 IS THE FIRST HURDLE NIFTY HAS TO CROSS IN ORDER TO MOVE UP TOWARDS THE CRITICAL LEVEL AROUND 4430 THAT MAY SEE SOLID SHORT COVERING TO TAKE NIFTY UP TOWARDS PIVOT AT 4442 SUSTAINING ABOVE WHICH ONLY CAN TAKE NIFTY FURTHER UP TOWARDS 4464 OR EVEN TOWARDS WEDNESDAYS HIGH OF 4477 THAT MAY SEE SOLID PROFIT BOOKING. HAVING BEEN DECEIVED BY DECEPTIVE DOW FUTURES ON WEDNESDAY, ASIAN MARKETS MAY BOUNCE BACK WITH VENGEANCE ON THURSDAY.

Chart analysis

Market Chart for 18 aug 09

Markets for 19 aug 09

As expected, in spite of 186 point fall in dow overnight, asian markets as well as indian markets were less affected and showed resilience to move up remarkably with sensex gaining by 250 points and nifty up by 71 points. It looked as if the indices were moving with a vengeance and both sensex and nifty kept on moving up from the start itself as if a fresh up move has started. Well, how far this bounce can go is to be seen but certainly a decisive cross over of 4480 or more importantly 4492 can easily take nifty to much higher levels to cover the entire gap till 4560 levels.

From friday 14th aug high of 4613 till tuesdays low of 4375, nifty had fallen by 238 points . So a 38.2% upward retracement till 4466 has been covered on tuesday. A 50% upwards retracement can take it till 4494 level which nifty almost reached on tuesday by making a high of 4491.a 61.8% retracement may take nifty till 4522, if down side resumption of the fall does not start from wednesday. On tuesday nifty moved up above 50 dma at 4402 to close high above it at 4459. So on a down side move, the same 50 dma at 4402 should arrest further fall towards critical level of 4360 to 4350.besides bouncing back from 4357 on 12th august, nifty has managed to protect the level around 4360 twice this week also.

So the level of 4350 to 4360 may be a strong support before the expiry and option traders may write 4300 & 4200 puts on decline of nifty as well as boldly write 4600 and 4700 calls on every rise & hold these shorted calls and puts till expiry as long as 4350 is not breached on the down side and 20 dma around 4550 is not breached on the up side. Option buyers should be extremely cautious in holding out of the money bought option as these would get reduced to zero value faster with only 6 trading days left before the expiry. Quit early or short lower puts or short higher calls with the bought options. A decisive breach of these critical levels of 4350 & 4550 can see good move in the direction of breach. Resumption of the down side move in u.s & asian markets may threaten the critical nifty level at 4350. However, with such a big fall in dow on on monday night, one can easily expect a pause or up move in dow on tuesday that may see another bounce in asian markets on wednesday.

In spite of the 71 point up move in nifty on tuesday, the daily indicators still look weak and look dangerous for further falls. In the hourly chart above, slow stochastic is precariously placed at the verge of sliding down. However another good up move by nifty may see about turn in the indicator to move back into the upper zone to signify further up move.

FOR INTRADAY TRADING ON WEDNESDAY, EXPECT A MILDLY BULLISH OPENING. A CROSS OVER OF 4481 CAN TAKE NIFTY ABOVE 4500 LEVELS. THE INDEX HAS STRONG SUPPORT AROUND 4444 LEVELS A BREACH OF WHICH CAN TAKE IT DOWN TO 4424 LEVELS.

Markets for 11 aug 09

Slowly & steadily nifty is making its way towards the critical level of 4380 which for sure will be breached to induce a bearish sentiment all around which will quickly liquidate weaker hands and after that only nifty will move up. On monday nifty breached the critical level at 29th july low of 4420 and went down till 4400 to close on an averaging basis at 4438. But interestingly, cleaner index the sensex did not breach july 29th lows of 14888 and could fall only till 14902. Perhaps tuesday may see sensex weaker than nifty . But one thing is certain that if sensex and sensex only breaches 22 july lows of 14787 and closes below it, then one can safely assume that the markets are forming a bigger corrective flat and there is every probability of sensex and nifty testing july lows of 13210 & 3919 before the end of august.

Harassing news on likely hood of draught in certain parts of the country coupled with swine flu cases occupying maximum time of financial news channels can easily take the markets in the desired direction of these financial news channels in coming days. This together with the planets in the heavens adding their quota of misery forces one to ruthlessly short on every rise of the market. The shorting mood was so ferocious that even a gap up open on monday morning could not survive for more than a few seconds and the end of the day looked as if the bulls were mercilessly hammered out of shape by the bears.

For trading on tuesday, the markets may show a well deserved bounce or at least a pause after the 3 black crows formation in daily eod candle charts. Nifty although may not decisively breach 4380, liquidation of weaker hands may commence from 4400 downwards. With kindness of rain gods, nifty may move up to find initial resistance around 4452 to 4464 levels. Only a decisive breach and sustaining above 4464 can bring back the whipped away bulls to laboriously pull nifty towards 4500 or 4512 pivot levels to hand it over to the bears again. Not withstanding this aspect of bearishness , the markets are highly oversold and may show a sharp bounce any time.

Markets for 10 aug 09

The new week opens at the back drop of massive falls on thursday & friday that had generated the fears in the minds of traders that if the last swing low of 4420 is breached then nifty can fall like a stone to its previous swing low of 4380 which is the make or break pont for the bulls. Over emphasis on poor rain falls last week and 4 suspected death cases from swine flu out of a population of 120 crores, makes traders to seriously think whether to laugh or go along with the news channels to continue shorting the markets on every rise.

Well, the 2 days of well coordinated falls in the markets have definitely dented the very short term out look that can only be repaired if nifty rises to close above 4600 levels. Although a good rise in us markets on friday night to be followed up by asian markets may mitigate the bearish out look on indian markets for some time, yet unless nifty rises to close above 4600 levels, chances of a sustained recovery looks bleak & every rise may meet with ruthless shorting till such time nifty is made to fall below the critical level of 4380 to induce a bearish feeling to liquidate balance of the weaker hands.

For intraday trading on monday, even a rise in nifty to sustain above 4525 can bring some hopes for the trapped bulls because sustaining above 4525 can take nifty towards 4557. A follow up buying above 4557 can take nifty towards 4580 levels to again encounter shorting pressure, as a 100 point rise under such bearish condition looks to be a bit too much under the present circumstances although short covering by the bears can take nifty towards the 4600 levels but sustaining above it seems to be highly ambitious for the bulls who would prefer to liquidate their longs to wait for the alarming news on rains as well as swine flu to die down as had happened in june.

ON THE DOWN SIDE PATH OF LEAST RESISTANCE, NIFTY MAY FIND INITIAL SUPPORT AROUND FRIDAYS LOWS OF 4464 TO GENERATE A FALSE HOPE AS IF A TEMPORARY BOTTOM IS ESTABLISHED ONLY TO SLIDE LATER TOWARDS 4444 TO 4433 A BREACH OF WHICH CAN QUICKLY TAKE NIFTY TOWARDS THE INTRADAY DECIDING POINT OF 4420 WHERE THE BEARS WOULD LIKE TO POCKET WHATEVER PROFIT THEY MAY GET AS THIS IS A POINT WHERE BULLS MAY AGAIN SPRING INTO ACTION AS HAD HAPPENED ON 29TH JULY WHEN ALL BEARS WERE CAUGHT NAPPING.

AS PER HOURLY CHART ABOVE, MARKETS LOOK OVERSOLD AND IMPORTANT HOURLY INDICATOR IS GENERATING A FEEBLE +VE DIVERGENCE WHEN THE PRICE WAS MAKING NEW LOWS BUT THE STOCHASTIC INDICATOR WAS NOT MAKING A NEW LOW AND IS ABOUT TO COME OUT OF THE LOWER ZONE THAT SHOULD GENERATE SOME INITIAL UPWARD MOVEMENT. HOWEVER FAILURE TO MOVE HIGHER THAN 4525 AND SUSTAIN ABOVE IT CAN AGAIN WEAKEN NIFTY AS WELL AS THE STOCHASTIC INDICATOR.

Markets for 07 aug 09

Again the critical index level of 4717 became a formidable resistance and nifty having remained above 4700 for the most part of the day could just touch the level of 4717 once & traders realizing that nse index can not cross the magic level of 4717, suddenly went rampage on a ruthless shorting spree & bulls too liquidated their positions and joined the party with bears & started shorting when the critical intraday support at 4560 was decisively breached. The merciless shorting was so powerful that nifty kept on falling & falling till it reached the lower band of the rectangle around 4560 levels. Although the savage fall during last hour of thursday has sprained the back bone of nifty, only a decisive breach of 4555 will certainly break the backbone of nifty to reach 4475 levels in quick time. However a bounce back from thursday lows can be considered as a normal fall induced by the met department as similar was the case on 29th july induced by reliance results or like the fall on 22 july induced by commodity price melt down.

If one has a look at the hourly chart above, one will notice that nifty after breaching the neck line of the mini h&s formation,took support exactly at the base of the rectangle. The ferocity of downward move clearly suggests that the base of the rectangle around 4555 will be breached & nifty may come down further to find temporary support around 100 ema around 4515 levels, & a breach of 4515 can easily bring down nifty to support around make or break 4477 levels. All these gloomy situation will only occur in case of a weak us & asian markets. However with strong asian markets in the morning ( which seems to be most unlikely), nifty can show a sharp bounce back towards 4628 to 4646 levels to encounter another bout of shorting, but whether the shorting this time will be successful or not is to be seen.

The fall on thursday has weakened most of the daily indicators all of which were earlier enjoying the luxury of upper 80% comfort zone & now have slipped below it. Another day of fall can confirm the weakness that the daily indicators have started to generate on thursday. Last weeks close for nifty was at 4636 and last weeks high was at 4670 after 3 consecutive weekly rise. So, niftys closing below the highs of last week may be nothing uncommon although bears will make their utmost efforts to pull down nifty on every intraday rise on friday to close below last weeks closing levels of 4636 to thwart 4th consecutive weekly gainA

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.

Markets for 03 aug 09

The new day, new week & the new month opens with the optimism in the minds of many traders that since sensex has crossed the june highs of 15600, nifty must cross june highs of 4693.but the whole thing will depend on the condition of asian markets as well as ever low volume sluggish trading in sgx nifty. In the daily eod chart, a doji star generates fear that perhaps the up move is nearing the end. However a decisive close on monday above the high of the doji at 4570 may dispel such fears. Only a fall and close below 4525 can confirm the evening star formation for further falls.

In the hourly char above, a bullish engulfing pattern can be clearly seen as the last candle of friday. So on monday, a further up move above the fridays highs of 4670 can generate a strong up move nullifying the chances of the evening star candle formation. Secondly a decisive cross over of fridays highs of 4668 can take nifty out of the rectangular channel for further up move towards "andrew pitchforks" upper resistance zone of 4700+ levels as indicated by blue lines in the chart above.

In case of a fall, nifty most likely will find support around or above 4600 levels as can be seen in the hourly chart above.13 hour ema around 4588 that saw nifty bounce back from it on last hour of friday may provide strong support to nifty in case of a fall below 4600 levels. Secondly in the hourly chart above, although slow stochastic has fallen below the higher 80% zone, yet there are strong possibilities of it turning up to re enter the upper zone to generate strong bullish signal.

Nifty most likely has entered the 5th up sub sub wave from the lows of 4422 that may move to much higher levels above 4700, but can only be confirmed on a decisive breach and sustaining above previous high of 4693.for intraday trading on monday, one must look for an intraday correction similar to friday (can only hope if one gets it on monday also) to enter long positions for good gains.
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