QUO VADIS? Nifty!!!!

We have a holiday today, so I guess lucky to have avoided another fall considering the weak global markets around us. Today also saw the release of Inflation Figures which surprisingly have reverted to single digits. A cause of celeberation? Why not? A small rally? Sure! Isn’t it how we reacted to IIP numbers yesterday before plummeting.

The range mentioned on my last weekend post 2850 to 3250 for a breakout on either side held well. Now the bias shifts to 2750/2700, last hope for bulls because any break below 2700 is surely going to be testing time for the bulls. A quick glance at the daily chart of nifty shows we had reacted to our long term trend line and snapped back. It has also become too much of a work for the bulls to even stay and close above the 20 periods MA (drawn in green). We have closed again at the 38.2 percent retracement, much will depend on who takes control from here. The hoping bulls are looking to pullback from here, and draw, what looks like an inverted complex H&S pattern with a breakout above 3160 (drawn on closing basis on the chart) can’t really blame them, as I have been often saying Hope lays eternal in a bull’s heart! The overhead resistances which I find are much harder to overcome now are at 2950/3050. Where as the supports which are so easily taken out are at 2750/2650. SO we can say that our range has shifted with a negative bias for now.

If the bulls are allowed liberties to see their inverse H&S then the bears are also allowed the same like seeing their double top in the hourly chart of which they have broken the neckline and eyeing 2550/2600. No wonder it is said the market gives each everything what they desire you just have to be smart to take it at the right time! The hourly shows the convergence of two MA’s, the 20 and 50 converging at approximately 2960/70 levels which turns to resistance for now. As usual we need to take the step by step approach. In the eventuality of opening gap down tomorrow and if we see 2685/2700 holding then one can safely go long with a very tight stop at 2650. For the people who want to plays safe the best is to stay put till we take out 2950/3050 convincingly. And for shorts the stops should be at 2970/75.

Quo Vadis? I don’t know just follow the flow!!!

"Ability is what you're capable of doing. Motivation determines what you do. Attitude determines how well you do it."

Lou Holtz