Weekend Views On Nifty!!!

A good end to March and equally good start to April, below is the monthly chart of Nifty and we can see that we have managed to bring ourselves above the 61.8 Fib (drawn from 2003 lows to 2008 highs) and also retraced to 23.6 Fib (drawn from 2008 highs to 2008 lows). Nicely nestled between the support/resi zones shaded in the chart. The only thing that looks like providing resistance on the monthly chart is the 50% fib and 50 periods MA together at 3650!

The weekly chart below forced us to redraw the triangle; in fact the shaded area on the dashed TL gave it an impression of a downward breakout. Though the break did give a quick short but overall the pattern was a false breakout (no wonder the pundits say “triangles are notorious”). Now Nifty looks like going to test the 50 periods MA which is co incidentally at 3635!!! So 3635/3650 makes it a good resistance to watch out for.

The daily chart is as colorful as the weekly above; this is our third attempt at breaking out of the congestion shaded in yellow. The channel in green (the bull ambush!) is actually too steep for bulls comfort but anyway it has done its job. This long period of sideways consolidation had done one great thing; it has bought down the 200 period MA (3463) to a striking distance, the next logical target on the daily charts. We have a resistance at 3240/50, and with things getting excitedly overbought, a breather is needed. Any retracement from here will first test 3150 (previous high and also the gap support of yesterdays euphoric move!). This time bulls have plenty of supports (see the hourly chart below) on the downside like 3100/3050/3000 and finally the famous 2950!

Speaking of supports, nothing is much better than the hourly chart below to display them. First I have shaded in blue (had to make the chart colorful!) all those sweet little water bodies a.k.a GAPS. These can be unfulfilled fantasies of Bears or can turn into nightmares of Bulls. Dumb as I am, I finally gave up identifying these gaps as Breakaway/Runaway or Exhaustion gaps, so taking the creative liberty let’s just call em BEARAWAY gaps!!! No idea which will be filled or won’t be filled but each one will be a delight to watch. Like said earlier it would be a game of Dragons and Dungeons. As mentioned earlier, things are looking overbought (and price too is overextended from the MA’s) and retracements mentioned above are likely to happen.

"The worst part of success is to try to find someone who is happy for you." Bette Midler