Weekend Views On Nifty!!!

Another month goes b(u)Y and Nifty ends this truncated week (we were closed on Thursday and Friday) with a flourish. Is this Rally over or has it some juice left still? I feel instead of pondering over this as traders we should just trade what the price tells us. But then analyze also we must. Analysis acts as radar it just cautions us of what might lay ahead. And speaking of analysis then here I go with my views on Nifty.

Starting with a Monthly chart (it pays to look at your monthly charts once in a month at least!); we can see that price is approaching a historical resi turned support turned resi point! This also where the Price is meeting the 50 MA on the monthly chart, the yellow band is the range which we have traveled at one go and I personally feel this ought to retested and cemented. Above 3557 on the monthly chart the next point of resistance is at 3730! And speaking of supports on the monthly charts there is none besides 3150.

Moving over to the weekly chart, the range I mentioned earlier is well illustrated and here also it seems the Price is stalling at the 50 periods MA with the 200 MA just a wee above it. Double Whammy?

The daily below is as revealing as it is colorful! We had a flag pattern which gave the first target of the previous high on breakout and ended up making a Double Top (I would rather say a multiple top till DT is broken and confirmed!). The tryst with 200 has been on for the last two weeks. Like I had mentioned in one of my earlier posts that this double top only gets confirmed on breaking the trough in between or it might just end up as sideways rectangular consolidation. Anyway for us Nifty has made it a lil easy to trade; the yellow zone is a daytrader/ scalper’s playground. Any convincing break on either side of the yellow range gives the upper and lower targets which are in sync with monthly 3730 and 3150, resistance and support as mentioned above. A note of caution though; the indicators below have already started to flash some warning signals with RSI first giving a negative Divergence and also making a H&S right at OB zone(the 70 line!) and MACD lines giving a bearish crossover along with the Histogram’s Divergence.

The Hourly chart below shows how the intraday movements are, but most importantly I want you to see how one of the patterns I love to trade (Divergences!) gave some good trades. The red arrows show the negative Divergence which warranted a short on break of the red dashed trend line. This was immediately followed by a hidden bullish divergence marked in blue arrows that gave a long trade, as soon as we broke out of the blue dashed trend line!

"Life unexamined, is not worth living." Democritus