Nifty started the week with a gap up opening and continued to trade near our level of 4791 for some time before moving up, Thursday and Friday nifty gained momentum and gave good gains .
The index gained good 340 points or 7.2% and settled at 5050 most of the front-line stocks also showed good recovery from the bottom, with major central banks globally uniting to fight the current crises , banking stocks hold promising outlook at-least for the short-mid term.
Let us see the alignment of some of the key technical Indicators
Ichimoku Kinko Hyo: Still in sell mode but gave positive signals throughout the week, firstly by clearing the base and conversion line and finally conquering the cloud, a buy signal from here would only add more strength to the bulls because this would be above the cloud and would be considered strong in terms of the parameter of the indicator.
NIFTY support and resistance
From the up move to the high of 6339 to a low of 4640 nifty is moving in a narrowing formation, the current formations looks like a triangle , nifty is likely to continue withing this formation for some more time, however a breakout/down from the range will decide the further direction on the index.Nifty broke the channel but managed to close the previous week above the trend line and this week saw a good bounce from the lows.
38 DAY EMA : This moving average has been successively giving good trades throughout the year 2011, nifty managed to close the week above this EMA at 4996 level, which should give support to nifty now, else bears would again be in control.
FIBONACCI PROJECTION
Fibonacci projection in nifty shows that nifty has reached the resistance by completing the retracement of the previous move, nifty managed to close above the resistance at 5120 level, how ever a move below this level would open the gates for another down move, aggressive shorts to be taken below this level only.
Nifty Fibo channel from the fall from 6339 to the lows of 4639 shows the price action has been in a channel and this bounce from the lows has been fast and could result in the change of the trend ,it may be early indications but so far there has been no exhaustion sign or development of any divergence to bring about a pause to this up-moveon Friday nifty managed to clear the 61.8% at 5004 level and should now target 78.6%at 5153 and 88.7%at 5239, the support is at 50%at 4900 level and below that 38.2% at 4793 level
As indicated last week, MACD has started to show reversal signs indication a short trem bottom is in place at 4640 level, the indicator gave another indication of the upmove to continue and there is no sign of reversal yet.
Stochastic has given good trade setups by giving early indications of overbought and oversold conditions shows that there is steam left for more upside possibility.
As indicated in the previous post the Stochastic has also reached the oversold territory, and a technical bounce either in form of flat correction or until the stochastic reading starts indication of overbought zone.
NIFTY POSSIBLE ROUNDING TOP FORMATION:
A chart pattern used in technical analysis which is identified by price movements that, when graphed, form the shape of an upside down "U". A rounding top may form at the end of an extended upward trend and indicates a reversal in the long-term price movement. The pattern can develop over several weeks, months or even years, and is considered a rare occurrence by many traders.
The chart below illustrates a rounding top.
NIFTY BROADNING FORMATION
A pattern that occurs during high volatility, when a security shows great movement with little direction. The formation is identified by a series of higher pivot highs and lower pivot lows. A trendline drawn over the pivot highs and under the pivot lows frames out the widening pattern. It looks like a megaphone and, in fact, it is also known by that name.
A chart pattern used in technical analysis which is identified by price movements that, when graphed, form the shape of an upside down "U". A rounding top may form at the end of an extended upward trend and indicates a reversal in the long-term price movement. The pattern can develop over several weeks, months or even years, and is considered a rare occurrence by many traders.
The chart below illustrates a rounding top.
NIFTY BROADNING FORMATION
A pattern that occurs during high volatility, when a security shows great movement with little direction. The formation is identified by a series of higher pivot highs and lower pivot lows. A trendline drawn over the pivot highs and under the pivot lows frames out the widening pattern. It looks like a megaphone and, in fact, it is also known by that name.
Broadening Formation
The trade setup last week enabled us to short at 4790 level and as we were stopped out early in the week and reversed to long above 4820, gave more then 230 points for the week
THE WEEK AHEAD:
As the two trendlines diverge from the apex, the pattern resembles a reverse version of a symmetrical triangle. This pattern is considered quite rare, but is useful in helping technicians to identify swing trades, rather than a trend trades. PREVIOUS WEEK:
The trade setup last week enabled us to short at 4790 level and as we were stopped out early in the week and reversed to long above 4820, gave more then 230 points for the week
THE WEEK AHEAD:
Expected High /Low for the week 5210.25-4902.70with 4955 being the pivot point for the week, positions taken near these levels would give good trades for the week. buying near 4915-25 levels with SAR below 4900 level and taking short positions near 5190-5115 with SAR above 5220 level should be the strategy for traders with no position, those who part booked at 4870& 4920 level should rebuild longs near 4965 and 4910 levels and hedge/part book near 5190 level
HAPPY TRADING!!!!!!!!!
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