Tryst With 200! Weekend Views On Nifty!!!

Another week goes b(u)y; but this time the fight’s on for the 200! Shall we call it the “200 Supremacy” or the “200 Ultimatum”?

First the weekly chart below shows we have broken out of the rectangular consolidation we have been in since last October. In the process of this breakout we did also breakout of the falling Trend line drawn from the all time highs! All this has now led us to within a strikeable distance of the weekly 50 MA at 3561 which is sure to pose as a staller; even if it’s momentarily! As for the weekly supports the 3250 and 3150 look good in normal retracements.

Moving on to the Daily chart we can see that all action or should I say Reaction is at the 200 MA! It’s almost a battle; when you realize what marks a Bull or a Bear phase is generally decided on which side of the 200 you are. Interestingly for the last three days we have been meeting resistance at 3500 area and equally more interesting is the chart formation; a bearish engulfing followed by a shooting star of sorts. I have annotated the chart with the similarities in price action we have witnessed in the past. One more interesting observation is that the RSI below has broken its TL drawn from its rally start lows, will the price follow suit? Like I said earlier this parabolic rise how much ever fast it is, has left even the bulls bewildered. There are no divergences on the daily chart, and so far whatever retracements have been happening, have happened during the intraday moves! Incidentally the 23.6 and 38.2 percent retracement coincide with the top and bottom of the blue support band; I have drawn on the chart. And one more point I keep on harping about is reversion to the MEAN! We have drifted way to above the 20 MA and a meeting between the Price and the 20 is in order. Now once again this is only possible in two ways; either the Price pullbacks towards the MA or it just consolidates sideways to pull up the MA.

Ah! The intraday chart; the hourly, with the ATR almost at 150+ (5days), intraday players are let us just say “Lovin It”! This is the only chart which has been showing negative divergence. We have a crude H&S formation (or one can be content by just calling it a sort of DT considering the last two tops!). Anyway a fall from here gives minimum two targets of 50 and 150 points each. A 50 pointer drop immediately gets netted at the 50 MA and the 150 one takes us to the TL support!

"I have not failed. I've just found 10,000 ways that don't work." Thomas Edison