Sunday, September 28, 2008

Weekend Views On Nifty!!!

With nuclear deal almost under wraps (we might celebrate it once more with a small bounce!) now we are waiting anxiously for the bailout package the U.S government is planning to implement, that should set the course for the moves ahead. Secondly we have our results season coming up, so another trigger on the way. As regards to the churning in the U.S and the so called injecting of steroids (bailout) I wonder how long will the effects last. I am no economist but just as a simple layman I was just wondering, with the U.S homeowners defaulting on their home loans (mortgages as they are called!) isn’t it a probability the next line of defaults will be the credit card payments!!! So another bailout package will be needed this time to save the credit card companies…… another way at looking this is that with all these bailouts and takeovers the U.S. government might just end being the largest real estate owner of the country and also the owner of many of the financial institutes. Capitalists turning to Socialists????. Anyway let us move on and see what our charts are telling us for the next week.

The Weekly Picture:

The weekly chart below, shows that once again Nifty after a brief penetration of the long term falling trend line, has closed below it. Back again inside the channel we are heading to test the lows (3790/3800) again failing to hold on to these might open the doors to 3550. The MACD histogram is still showing bullish divergence, maybe a new low in price is accompanied by even a shallower low in the histogram; giving us a triple bullish divergence! Wishful thinking anyone?

The Daily Drama:

We had a classic H&S pattern which broke down and price did make an attempt back at the neckline (yellow Line) failed and is headed lower to test the lows. The ADX is beginning to move we have a negative cross of the DI lines. Our now oft repeated levels of 4050/4150 and 4250 present a formidable resistance to any move up, whereas failing of the 3800 support might be a nasty experience. In trading many analysts swear by the closing price rather than highs and lows, the argument is that many traders use different types of styles to draw their charts. Some like line charts others candlesticks, some make do with hiekin ashi candles and yet some swear by point and figure. Therefore this makes the closing price very important, and speaking of closing price I have inlayed on the above chart the line chart of prices from JULY’08 to SEP’08 and what do we see? Voila we have already broken the lows of 18th September on closing basis though the actual low is 3799!!!! Just a point for you to ponder!





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