Nifty Recap For The Day!!!

I am back from my holidays and I guess I didn’t miss much action either (ADX has all the clues if monitored carefully!). Anyway moving on to Nifty, we had a flattish opening, taking some solace from the Asian bourses which open ahead of us, and with some apprehension and volatility we bid our time to see how Europe would open. So far so good, a nice day, but the real foundation of this day was laid yesterday with the Hammer we made on the daily chart!

Not posting the 5 minute chart today instead lets move directly to the Hourly below. Yesterday’s action was fascinating, we slammed, dunked and closed above the 200 period EMA (Red Line) on the hourly chart. The small hammer we made on the hourly yesterday is our new pivot lower low. I would also call it the lifeline of bulls for now hence marked it as Bear territory on the chart. Speaking of today we have reclaimed the 20 period EMA (Green Line) and now facing resistance at the 50 period EMA (Blue Line) at 4445, which is right on the 38.2% retracement line of the recent swing of Nifty as marked on the chart. Nifty needs to take out 4485 (50% retracement plus we have the 20/50 EMA cross there) and 4525 to be able to sustain this up move. Any close below 4315 negates this uptrend and we head for the all important 4150!

The daily chart below has the HH and HL sequence intact. The price is trapped between the 20 and 50 MA’s. The ADX is STILL, and MACD lines have started to give a sell signal. Too many resistances overhead (my chart is cluttered with those dashed lines), it needs to close convincingly above 4480/4500 to aim for 4630. We are now looking out for cues from the global markets. Tomorrow also we may see unwinding of positions in the late trades’ coz of the inflation numbers due in the evening. Personally I wouldn’t play positional; any chance to get into swings is a good idea. For all aggressive longs 4315 should be the stop loss and for the conservative players it should be below 4250.

"People of mediocre ability sometimes achieve outstanding success because they don't know when to quit. Most men succeed because they are determined to."

George Allen