Wednesday, March 14, 2012

Nifty: Inflexion zone!

Bottom Line: Nifty continued the gapping action and rewarding only the positional long traders!
Nifty Daily
Nifty 30 mins

We have mentioned in our previous update, “ We do not think that current trend will be able to exceed above 5540 – 5560 levels, where current up leg shall terminate and next leg C can start taking prices near 4900 levels.”

Nifty came dangerously close to this zone and made a high of 5500 during opening yesterday. We would now advise extreme caution as we might be in later stages of this minute wave c. Also prices opened with a big gap up and filled most of it during the day. If we start correcting down from tomorrow this would prove to be an exhaustion gap.

As seen on 60 mins chart, prices are not able to maintain the momentum and moved out of the trend channel. These are indications of slowing uptrend. However we do not have any negative confirmation and as long as prices are above 5415 the trend can continue further towards 5500 – 5550 zone.

We have also entered into the big event zone and so please trade cautiously and avoid getting whipsawed if big swings happen during monetary policy today or budget session tomorrow. Our advice would be to keep exposure to the minimal in equities and we are reaching inflexion point where the events lined up can act as a trigger to the start of c leg down.

In short, we are cautiously positive since there is no price confirmation to change the bias. As long as 5415 is intact we can move up towards 5500 – 5550 again. A move below 5400 will be first negative sign.

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