Hit with a negative sentiment; a weak Dow and equally sad Asian markets in the morning, Nifty opened with a gap down. It is said of the Market; that it abhors uncertainty. After the initial gap down we went into a sulk frustrating both the bulls and the bears. We finally moved when the news of the LEFT withdrawing the support to the government hit the television channels. Finally they pulled the plug! How did the market react to it? Relieved! You see like I said earlier the market doesn’t like to operate in suspended animation. Everything has two sides to it, and it is just a matter of perception how we look at things. The market it seems had discounted the inevitable (Left Withdrawal) and now it was time to look at the brighter side of this deed. With the LEFT off their back maybe it will be easier for the government to push, faster the much needed economic reforms, which had fallen prey to the so called ideals of the Left. The government still has a trust vote to win, but I guess they will cross that bridge when they come to it.
Speaking of today’s intra day action, after the initial hiccups we seemed to have moved in a nice upward channel on the 5 minute chart. I admit that the chart looks clean with HH’s and HL’s, but it was very difficult and frustrating to trade it in real time. Too many whipsaws. On the hourly chart we have made yet another higher low (good sign for the time being) and managed to close near the 20 period EMA. This again brings us to the same familiar routine; we need to surpass the resistance provided by the falling 50 periods EMA and close above it. On the daily chart we have made a Hammer signifying our disliking to go lower. The two horizontal green lines marked on the daily chart hold the cues to the direction we would take. The price just needs to break any one of the two convincingly and we are in business. Till then Nifty will keep on frustrating the positional shorts and longs alike.
I will leave you with a beautiful gem regarding Technical Analysis. There are no such words as “ALWAYS” or “NEVER’’ in Technical Analysis!
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