Friday’s gap down was wee bit of concern. We just fell because Dow fell badly on Thursday. Later on the day we had sad news of serial bomb blasts in Bangalore and now on Saturday in Ahmedabad. First let us take stock of the weekly chart above. The hammer we had on the previous week played it self well last week and gave almost a 500 point swing. This weeks candle suggests hesitance to move up and quick profit booking. I guess with so much of bearishness in the last few weeks any opportunity for profit booking is immediately grabbed. The weekly supports is at 4250 level which it needs to hold on closing basis otherwise 4050 will be tested on the lower side. The daily chart below has thrown an interesting setup for candlesticks followers. We seemed to have made exact opposite patterns; The Morning Star and The Evening Star (see the shaded areas)! Like I had said earlier Nifty has found resistance at the 50 period MA. Any close below 4250 on daily charts will take it back to the comforting hug of the 20 period MA which is a just a bit higher than our important support level of 4050.
The hourly chart also has the same story to tell. The focus again remains at the area shaded on the chart. The shaded area (4235-4270) has a cluster of supports starting with 200 period EMA (hourly), 38.2% retracement from point A to B, the 50 period EMA (hourly). This brings us back to the all important 4250. The salvation would come if we fall and manage to close above 4300 on Monday and later take out 4360/80 on closing basis. For the traders I guess 4250/4380 needs to be broken to generate good swings and as for the scalpers I guess it would be just Shoot and Scoot!!!
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