The Nifty was expected to go up today too and a target of 4990 was expected but it was mentioned that there is a fair bit of resistance between the 4935 and 4950 zone. That was exactly what happened today. It kept moving between 4920 and 4950 in the first half of the day before the bears took control and pushed the markets downwards. The crash was sudden and sharp but was expected. We also saw the end of the F&O (Futures and Options) month today.
Seen above is the 30 minutes chart of the Nifty. This chart has got 2 colours of trendlines – light green and dark green. The light green trendlines show why the Nifty found resistance near 4950 today. On the other hand, the dark green trendline shows where the support is – near 4830. You can notice how the last candle went all the way down to 4804 and then closed above our support at 4830. This small breakdown of prices below the trendline and then bouncing back above it does not signify a break of the trendline. A breakout or breakdown is significant if the prices penetrate the trendline decisively and with high volumes. It will usually be a large blue/red candle depending on which side it breaks out on. We still have support at 4830 and resistance at 4950. Tomorrow being the first day of the new F&O month, the market may, I repeat – may, stay within this range for sometime before moving below the 4830 trendline.
Looking at the bottom half of the chart, which happens to be the Relative Strength Index (RSI) of the Nifty, we can see that within the green rectangle the RSI found resistance at 60 and turned down from there and that does not give a very bullish sign. As of now the RSI has not broken the upward sloping trendline below it and that is the only thing which shall decide whether the Nifty will find support at 4830 or not. If the RSI holds on then the Nifty should also hold on to 4830 but if the RSI breaks through the trendline, I’m afraid, so will the Nifty.
More on Monday/Tuesday. Happy Investing!!!
Seen above is the 30 minutes chart of the Nifty. This chart has got 2 colours of trendlines – light green and dark green. The light green trendlines show why the Nifty found resistance near 4950 today. On the other hand, the dark green trendline shows where the support is – near 4830. You can notice how the last candle went all the way down to 4804 and then closed above our support at 4830. This small breakdown of prices below the trendline and then bouncing back above it does not signify a break of the trendline. A breakout or breakdown is significant if the prices penetrate the trendline decisively and with high volumes. It will usually be a large blue/red candle depending on which side it breaks out on. We still have support at 4830 and resistance at 4950. Tomorrow being the first day of the new F&O month, the market may, I repeat – may, stay within this range for sometime before moving below the 4830 trendline.Looking at the bottom half of the chart, which happens to be the Relative Strength Index (RSI) of the Nifty, we can see that within the green rectangle the RSI found resistance at 60 and turned down from there and that does not give a very bullish sign. As of now the RSI has not broken the upward sloping trendline below it and that is the only thing which shall decide whether the Nifty will find support at 4830 or not. If the RSI holds on then the Nifty should also hold on to 4830 but if the RSI breaks through the trendline, I’m afraid, so will the Nifty.
More on Monday/Tuesday. Happy Investing!!!
7 comments:
been reading your blog from the past one week, must say you r doing a great job...
would be great to know if you see the nifty hitting the march lows in near future as widely expected by lot of market gurus....
thanks
regards
sumit
Yes, Sumeet, the March lows being hit is a strong possibility right now. The low in March was 4468.55, we may not reach exactly there, but yes, a target of between 4500 and 4550 is expected.
Of course, the rest depends on the Nifty whether it does decide to go there or not but the possibility is definitely there. For today, let's see if 4830 is broken on the downside.
Hi Vikas, it looks like reliance is headed for much lower levels, but other Nifty counters don't look that weak. Now it looks like operators have achieved their target of short-covering in Reliance and ICICIBank. Now they will frustrate shorts in Infy and let that drop when there is short-covering in that counter, maybe then Reliance will be taken up again. I really think, put writers in Reliance are about to get a scare, but Nifty is likely to stabilize around these levels...so most probably Infy and some capital goods counters will make up for decline in Reliance.
All wild guesswork of course...
nice to see ur posts.lot of help for the learners in the charts.
will there be a slump of two days like in jan?? and can the nifty bounce back with the same force as in jan ? do u see 5600 in june??
being too greedy !!??
i need ur help
do reply
regards
johnson
Hi Surakshit,
Nice blog to the trading community,
Nifty looks supports taken at 4835 levels. Pharma Stock are performing well . And infy on the way to reach 2000 shortly by tommorow.
Hey Vikas, how come you don't have the 'post comments' enabled for other posts of yours?
I read your posts in Reuters, you da best!
thanks
Uma
Sorry guys, I was travelling and did not have access to internet because of which couldn't reply to the comments earlier. Anyways, will take them one by one here.
Uma, in response to your comment on 30th, yes, Reliance is looking weak. It lost about Rs.40 today and has a target of Rs.2300/- which may be achieved in a day or two. About ICICI Bank, I feel the target has been achieved but it looks as if it would go further down. It has good support between 730 and 750. Below that there is a lot more downside. Regarding Infosys, again my target of 1950 has been achieved for the short term. Yes, Nifty did stabilise between 4850 and 4900 for sometime but has broken down today. 4500-4550 definitely seems likely.
Johnson, yes, i do feel you are being too greedy. 5600 in June is a highly improbable scenario. Yes, 4600 is more likely. In the markets there will always be slumps. Some are sudden (as in Jan) and some come gradually, it is unknown how it comes this time but a slump should come. And remember, if the market rises with force after a major slump, it is never good for the market. V shaped recoveries are always bad. Some base building is required before they start going up.
Thanks, Rajendran, for your comments.
Uma, coming back to you, the 'Post a Comment' link is there on all the posts, you just have to scroll down to the bottom. Soon after the post, there is a list of other posts that may interest you, then comes the footer and then the 'Post a Comment' link is there. On the home page the comments link is in the footer with each of the posts. And, thanks, for reading my posts on Reuters, and your appreciation.
Vikas.
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