Fed's Rally!!!Weekend Views On Nifty!!!

So I run to the Lord, “Please hide me Lord”
“Don’t you see me praying?”
“Don’t you see me down here praying?”

But the Lord said “Go to the FED”
The Lord said “Go to the FED”
He said “Go to the FED” all on that day

So I ran to the FED, He was waiting
I ran to the FED, He was waiting
I ran to the FED He was waiting, all on that day

I cried power FED!!!!

Hmmm…. What a week! A week full of chills spills and thrills...a rollercoaster ride of a lifetime and a valuable lesson testing the grit of the best of the best traders. The week started with a lot bad news, the markets reaction to such news was what normally it should have been but the higher powers (THE GOVERNMENT) intervened and tried to change the course of things. Did they succeed?...Yes the rally that followed the mayhem is the proof of it. So is it the good news?...Nope this in fact is even more detrimental to the functioning of free market mechanism in the future. Markets as they say discount all news, Markets have a mind of their own. Their own free will and that’s what’s makes them exciting and challenging. All this interference with curbs on short selling and trying to alter the conditions of the free market is going to be short lived, as the adage goes “You can’t push on a string”.

Well let us leave those deliberations to the people who are smarter than us, as traders we should just concentrate on our charts and our STOPS! As usual we start our analysis with;

The Weekly Picture

We have had a 14 point gain on weekly basis and also got ourselves a Dragon fly Doji, a bullish pattern if found at market bottom. The double bottom on weekly chart is accompanied with bullish divergence on the indicators. Now whatever the trigger is for this rally or however shallow it is, this divergence is telling for now we are going up. We have a good support at 4000/4050 and the over head resistance for now at 4350/70. Above that a retest of 4650 is not ruled out.

The Daily Drama

The latest bar on the daily chart above is nicely nestled between the two most discussed levels of ours 4050 and 4250. There is a convergence of the 20 and 50 periods MA’s at 4300 which in normal circumstances should pose some resistance or at least stall the price for sometime during the course of intra day action. But considering the crazy gaps we are doing now day I won’t be surprised if we surpass this level also by a virtue of a gap open. But then again so may gap ups is really not a good idea, it really doesn’t talk much about the strength of the bulls but rather gives an opportunity to the bears to strike with vengeance.

The Hourly Break

We have almost had a vertical rise and logically we should rest and resume the journey up. Immediate resistance staring at the price on the hourly chart is the 200 periods MA at 4280 approx and something major at 4370 where we can see a sort of trend lines meeting. Whereas the support cushion provided by the 50 and 20 periods MA’s is at 4150 and 4100 respectively, but personally I feel 4200 will do a good job just as well.

Overall like I said a very volatile week it had some sore losers, some fantastic winners among traders. This reminds of a quote I read long time back on perspective “Two men saw through the bars; one saw the dust the other stars!”

Btw I had twisted a word here and there in the original song Sinnerman by Nina Simone. A remix version of the song is worth a watch.