Another week goes by and now we enter into the derivatives expiry week, things will tend to get a bit volatile now. Nifty has given some good points to the longs and equally frustrating moments to the shorts. The triangle on the weekly chart below is still in play, albeit this pullback is shaking the faith of quite a few bears. The LH and LL sequence is still on. The price on the weekly has closed just shy of the 20 periods MA at 2823(Shorts should have tight stops between 2835/50). I personally would like to hold a bullish bias if I see a bullish divergence on the MACD (Sorry I confess I have a fetish for Divergences!). I have annotated the chart with abc move in MACD where c is still far fetched from reality nevertheless a possibility.
The daily chart shows the broad range where we have been in the last 5 months. Between this range, there are smaller ranges (right now 2680/2880 is in play with 2700 as important pivot). Nifty has been struggling with the 20 and 50 periods MA. As of now we are still moving in a downward channel and the lower highs and lower lows is also clearly visible on this chart. The RSI is again at those precarious levels from where we often pulled back after making tops! 2835/50 remains a good resistance on the daily chart whereas the support lies at 2715/2700/2680.
This brings us to the hourly chart, which is the only chart that was showing a bullish trend making Nifty; short term up (remember its weekly down and daily down). The gap down resistance marked in red has held well so far. As for the supports, shaded in yellow, is at Fibonacci confluences, the first one at 2765/55 has the 200 periods MA just lined below it with 50 not far below either. The second line of defense is at 2715/2700 level. What is more intriguing is that there is large gap below (shaded in blue) which remain untested and unfilled. I personally feel this ought to be tested and partially filled.
"An ounce of action is worth a ton of theory." Friedrich Engels
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