Monday, April 8, 2013

Nifty at crucial juncture!!!

Nifty at crucial juncture!!!

Nifty daily chart:

Nifty 60 mins chart:
Wave Analysis:

We mentioned in previous update, “We have been very bearish at the top of 6110 and currently the evidences are shifting towards short term low to be in place soon. Nevertheless, we do acknowledge the steepness of fall on Nifty over past 2 days and so the bias remains negative. In short, as prices have broken 5580 – 5600 levels the trend remains negative for a move towards 5545…”

Nifty has come to the inflexion point and it can be seen clearly on the daily chart. The last tick price on Friday was 5545 to the point and the average close was above this level near 5553 levels. As we mentioned earlier 5545 is the level where wave 4 ended during the uptrend and normally these levels are where prices should find some support. Prices have now come to the intersection point of big blue channel and the extended support from the Gap area of wave 3. Intersection of multiple trendline usually mark important turns. This indicates that over next few days we should see some stabilization in the markets.

At the top near 6100 there were series of negative divergences and currently prices are exhibiting series of positive divergences that too on daily scale. This indicates there is loss of momentum on the downside. However, it is extremely important for prices to provide some positive confirmation. Unless that happens, our bias will continue to be negative.

From trading perspective, the current situation is a difficult scenario for positional as well as intraday traders since the stocks that participated in this downtrend has started moving sideways and the stocks that showed good strength all the while have started showing weaknesses. During such scenarios it is important to be less leveraged and have prudent risk management in place.

On 60 mins chart, we are showing a black channel that connects the 2 “x” waves at the top. If this channel is working well then we get 5500 as the level on downside for support. Also on Friday prices failed to show positive tick for the rest of the day and any attempt on upside was not sustained. This do indicates that there should be some basing formation over next few days and the trend continues to be sideways to negative.

In short, a move below Friday’s low at 5535 will take prices towards 5500 levels but prices continue to be in matured stage of downtrend!

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