Weekend Views On Nifty!!!

AH! The year comes to the end, and time starts to make new trading resolutions. Resolutions which we might eventually break! Anyway time to start again with a clean slate, time to look forward and learn from the mistakes from the past. Well I for starters have RESOLVED to TRADE LESS TRADE SMART (may the Market give me strength to keep my sanity). Wishful thinking? Yups.

And now let’s see how Miss Nifty began the New Year, no nasty surprises on the first two days, is it cautious optimism? Maybe! We have had a stimulus package(Viagra?) announced by our government plus the all important Uncle DOW also gave a nice start to the year, and cousin Nikkei aint doing bad either! This is bound to bring in some exuberance on Monday. Then we have quarterly results coming in from next week which will influence to some extent. Yes they will be bad, the world knows, no secrets there. But what’s important is How BAD?

The first chart below is the monthly chart, just to give you the feel of the broader picture. There has been Price contraction happening for the last two months as can be envisaged by the two consecutive IB’s (Inside Bars). For all practical purposes we need to see how the break of 3110 pans out and how 2950/2885 holds out!

The weekly chart has shown once again a reversal bar, the MACD histogram is showing strength, the RSI is broken above its falling trend line. A break above 3110 can lead to fishing of short stops and resulting momentum can lead Price to 3150/60. Talking about 3250, I would wait first to see how this week unfolds itself.

The daily chart has 20 and 50 periods simple MA’s crossing at approximately 2885/90 so this becomes a support of sorts. If you use the EMA’s then you will notice that the latest NR bar (this also qualifies as NR4) we made on Friday sits right at the 50 EMA from where it had earlier reacted downwards. We have the indicators moving to the OB areas (especially the hourly), warranting some caution. Any intra day dip to 3010 is a welcome buy if it shows support there. The daily structure has been of lower highs and higher lows (contraction? you bet it is). Nifty needs to break 3250 convincingly, and trade above it, to create a higher high. This move will then confirm the December price action as the Higher Low and would act as sorts of intermediate trend reversal.

"The secret of success is constancy to purpose." Benjamin Disraeli