Monday, August 26, 2013

Nifty weekly review 26-8-13 to 30-8-13

Nifty Future has broken its long term support 5500 in this month and touched 5250 level in intraday. Last Friday’s close is 5460.70. Nifty future is in discount compare to Nifty but it’s not that much significant so we don’t consider it in analysing it.

We observed  a reversal Head and Shoulder pattern in Nifty Future, Nifty future is making this since last November 2012 when it has made bottom near 5555.  In April 2013, it is not only touched 5555 but broken down 5555 & found support near 5500. But this time Nifty Future had bounced back above 5555 in next 3-4 days & rallied till 6200 which is its last 2 years high.



After touching 6200 Nifty Future started coming down & again touched 5555 in June 2013. This time also it has managed to found support at 5555, again Nifty Future rallied till 6100 in July month by forming lower top as compare to 6200 when it was touched in April 2013 which is a bearish sing itself.

After that we have witnessed a sharp down fall in Nifty Future from last one month. Before that Nifty Future was trying to get support at 5555 & it has got it but this time Nifty Future failed to sustain over it for long time.


A horizontal trendline which I draw from last November 2012 till today is a Neckline of reversal Head and Shoulder Pattern. Neckline is most important thing in reversal Head and Shoulder pattern, when it gets broken down, a next bear market starts as many technical analyst feel.

In today scenario, we can see a broken Neckline which is clearly confirming a bear market. From last couple of trading day, Nifty Future recovered from its bottom 5300 & closed near 5460. If reversal Head and Shoulder pattern has to be correct, Nifty Future will fail to cross 5555 level in coming days & will resume its down trend again.

For confirming that we go to last 2 days positive rally in Nifty Future, volume is not encouraging as it is low while Nifty Future rallying. Open Interest is decreasing so it is clearly showing Nifty is rally because of short-covering not because of fresh buying. More shorts can add near 5500 what we think.


One down trendline also in snap which I draw from Nifty future high 6100 to short term pick 5759 & extended downward more to give how is trend. This trendline will also work as a resistance for short term rallies what we guess.


Having said all these thoughts we always remember one thing, a stock market is very difficult to predict so we always have strict stop loss in our trades as well as always ready for thinking of opposite side, what if this not happen.


If Nifty Future manage to break all these barriers & crossed 5555 level (of course it will break a downtrend line then which will be a positive side for Nifty Future rallying in coming days)) then Nifty Future will start a fresh rally & will have next up targets for itself. It’s all assuming game, what will happen when this happen & all that.


So we still maintain our view is Nifty Future is in bear phase & downside target will be 5200 in coming days, resistance is 5500-5555.


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