Stunning Intraday Action! Nifty Recap For The Day!

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???