Last week was spent amid much volatility and Nifty needed a pause, a breather. Any more gap ups or wild up moves would have been seriously detrimental to the bulls. In my last post I had mentioned 4300 to pose as resistance as there was convergence of 20/50 periods MA’s, today’s high was 4303! The almost vertical moves we saw in the previous two sessions resulted in short term oscillators going crazy; from OS to OB in a matter of few hours therefore these kind of breathers are required to bring them back to normal.
The hourly chart below encapsules the intra day action; we have a HH in place. The overhead resistance is at 4270/85, and immediate support in the form of converging 20/50 periods EMA at 4165.
The daily chart below has no new sight to offer. Like mentioned earlier we reacted to the 20/50 periods MA and took support at our long term falling trend line. Though there is a good likely hood of Nifty retracing to 4180/90 a 23.6% fib retracement from the low of 3799 to 4303. Just a passing thought we have had a crossover of +DI and –DI, all we need is now ADX to show some strength.
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