Nifty started the week with a gap up opening ut was unable to sustain the above it for long and the sharp rally on Friday shattered the hopes of the bulls, and nifty closed at its 52week low, the broader market suggest that the bottom is still to be achieved.
Nifty closed the week with 215 points loss over the previous week or 4.4% down
Let us see the alignment of some of the key technical Indicators
Ichimoku Kinko Hyo: Still in sell mode and the price is below the conversion line , base line and the cloud showing the weakness in the market.
NIFTY support and resistance
Currently there are two channels in Nifty.
The first chart shows the larger channel from the top at 6339 level, through out the year, price action has been within this channel, and currently the index is near the bottom of the channel, and is likely to give another good trade setup as the bulls would like to defend the channel, and the bears would be hoping to break-down from the channel,good positional trades can be taken with small stop-loss in either direction at the bottom of the channel.
38 DAY EMA : This moving average has been successively giving good trades throughout the year 2011, is trading in symmetrical patterns through out the year and this time also the price gets rejected in the first attempt to conquer 38DEMA and has give yet another good short trade.
The second channel is formed within the bigger channel and in line chart it indicates the bottom of the channel, it also give an idea about the EW typical 4th wave false break-out, and the swiftness in the fall suggest that nifty could be in the 5th wave of the fall.
NIFTY HEAD AND SHOULDER FORMATION:
a good head and shoulder is formed in the Nifty, the first chart shows the good formation
the line chart suggest that the neak line is broken, however in recent past the pattern has not achieved the desired results due to high popularity and wide use, keep an eye on the price action as it unfolds as it is likely to trap the weaker bears and also the newer entrants
the second charts shows the possible target of the H&S pattern. the length of the Head was 638 points and thid could be the most obvious target for the pattern, the neck line was broken near 4688 level so the target would be near 4050 level, but it is advisable to use Fibonacci levels to part book shorts and to make reentry at the resistances as they are formed.
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
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 with two shorting opportunities during the week the first on was at the beginning of the week to sell near the pivot at 4932 level( the top made was 4910& the open and high were almost same 4906&4910) the second opportunity was a break below 4724 level , which gave near 100 points returns( the low made was 4628)
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 with two shorting opportunities during the week the first on was at the beginning of the week to sell near the pivot at 4932 level( the top made was 4910& the open and high were almost same 4906&4910) the second opportunity was a break below 4724 level , which gave near 100 points returns( the low made was 4628)
THE WEEK AHEAD:
Expected High /Low for the week 4780/4498 with 4710 being the pivot point for the week, positions taken near these levels would give good trades for the week. buying near 4510-25 levels with SAR below 4480 level and taking short positions near 4760-80 with SAR above 4800 level should be the strategy for traders with no position, the SAR traders are short from 4900 level and have part booked should also rebuild positions near the Pivot and the expected top.
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