It seems that any rise is used by the traders to take profits or square off their positions. This is what happened today. For a student of chart reading today was a great lesson in patterns. Nifty opened firm after yesterdays fall but failed to hold on to the initial gains. Take a look at the 5 minute chart above. We met resistance at 3920 levels and formed a Double Top there. The break from the base line along with the 20 period EMA signaled a perfect short for the day. A retest of yesterdays low, and then another up move. This time Nifty didn’t go far, and proceeded to make a bearish H&S. In this case this was a continuation pattern keeping the preceding fall in mind. Well there is a triangle break also (every H&S has a triangle to it!). This break took the day’s low with it and the rush of new shorts took the price down. However during the last hour of trading there was exhaustion and we made an inverse H&S signaling a possible hold to the selling activity.
The daily chart below also has some interesting things to throw up. Apart from the huge positive divergence in MACD Histogram we have been seeing for so long now. If you have noticed that in these last two days of vicious selling the MACD Histogram has failed to go below the zero line. Are the Bears exhausted? The ADX is also coming down, signaling a possibility of weakening of the present trend, and suggesting some sideway movement in the future. As of now 3750 stays as support yet to be tested and on the higher side we go to 3848/3895/3920/3950! Will it be Step by Step or in one Big Candle???
thanks a lot manoj bhai...
ReplyDeleteNifty nearly touched the 3rd wave target levels at 3776(Touched 3790).A positive divergence has developed in daily, hourly & 5-Minute charts. Now the price has to confirm the reversal(Which it will oblige with world mkts' help). However, only a move above 4015 & 4117 will confirm a decisive reversal lasting few weeks. Failure to reach these levels will result in one last down (As during positive divergences new lows are made trapping bears).When EW is not clear or having many possibilities, just take refugee in technicals and tech says " I am quite oversold..Can't take this selling beyond a couple of days!"
ReplyDeleteDear Manoj,
ReplyDeleteGood recap of Markets. In my view its simply how bear markets are - rallies get sold into. Now see today's upmove, on global cues Nifty did manage to go up today but I believe it is again at important resistance level.
In my blog I had been saying this - there should be a relief rally, but will it sustain?
Let's see what happens in US, crude tonight.
Harish
Indexviews
beloved manoj
ReplyDeletegreetings
very good analysis
buddy, your resistance level is up to the point, mr.ramesh raja was also of your opinion about nifty, good manoj keep it up
cheers
easwaran
bangalore
Kurich Hi,
ReplyDeleteThanks For what man????
ilangovan hi
ReplyDeleteChief can I put your blog in my blog list.I believe a lot of friends can benefit from EW analysis!!!
cheers
Harry Hi
ReplyDeleteYeah we closed at resistance!4050 the MAKE or BREAK level for now.
Que Sera Sera!
Cheers
Horseman Hello,
ReplyDeleteThanks for your kind words!
Regards