06 February 2011

Nifty : Weekly Chart Check

After the fast fall of Nifty since the start of the year, the weekly chart has become very interesting as there are many crucial levels that have been broken. Without delay lets dive into the chart:

The most basic and evident technical setup to be pointed out should be the break of the trend line starting from 2500s Nifty lows. It gave support to Nifty during the November fall, but gave way in January. This factor itself should give jitters to many long term investors.

Second point to note is the 50 week moving average being broken. As of now it is around 5550 area, but has been tested from below and acted as resistance. The break of 50 week average, comes with an expectation of test of 100 week average which is around 5000 levels.

Third and final setup is the Ichimoku Cloud giving a "weak" sell signal [marked as A in chart]. Also see that this kind of "weak" buy signal was generated last in March 2009! We have cloud support at 5000 to 5200 area, and we should expect some sort of buying emerging here. Very interesting to note here is how price is trying to target the cloud where it is thinnest.

So in all I would be expecting Nifty to be in a downward trajectory unless any of these supports provide strong buying reason. Look out bulls, the game is never over...


alphabet1 said...

too much consensus on bear-hug ?!

Tarique Anwar said...

though I never like the crowd to be on my side.. its kind of good to have the market on my side!

what i want to say is there comes a point in a rally or a correction when, the consensus opinion is aligned to the market. i wonder how many traders feel that Nifty is oversold and can bounce back..

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