Weekend Views On Nifty!!!

I am back, the break did me good! The problems with breaks are that you get a bit lazy to get back to work hence such a late post. Let’s view the charts of Nifty and see what’s in store for us next week. First we take on the weekly chart above. We have closed above the 38.2% retracement of point A to B. Any close below 4375 on weekly closing basis will mark the end of this pullback. On the other hand we have overhead resistance at 4550 levels, which is the 50% fib ratio plus along with the trend line resistance. This area is also the logical target of inverse H&S (shown below on the hourly charts), will discuss that later. Above 4550 we have 4647/4727 to take on.

Now let’s move to a timeframe lower; the daily chart shown below. In fact both the charts shown below are daily charts. The one on the left is just simple chart showing pivots. We have a HH and a HL. In simple terms this just means that the trend in question remains up if it takes out the previous HH and it will reverse if it takes out the recent HL. The chart on the right shows we have just closed below the trend line resistance but more importantly above the 50 period Moving Average. Just above this we have a cluster of horizontal resistances at 4450/70 and finally the 4500+ which will be a bone of contention between the bulls and the bears. Since that marks the penetration of the huge sloping trend line drawn from the January highs.

Finally we have come to the hourly chart and the inverse H&S I had mentioned earlier. The two vertical yellow lines marked are nothing but a way to show how the basic target of inverse H&S is computed. Though the logical target for this pattern on the hourly chart remains near 4550 we still have to face resistance near the trend line which incidentally falls at 4480 and 4500 (A round number resistance!). My view is that we are innocent till proven guilty! As long as we trade above 4370 we remain firmly in uptrend, below 4370 the all important 4250 comes into force!!!

Another important thing I wish to mention that this pullback has many a people announcing that we are back in BLACK. I just want to say one thing first put a question to yourself and ask “Are we really in a BEAR market?” If YES then you can’t just wish it away in 6 months. These vicious pullbacks are synonymous with Bear markets and should be used for quick swing trades. Another most important thing is to build your portfolio slowly by buying little into the FALLEN ANGELS, a term used by Elder to describe good shares with strong fundamentals, which have fallen out of favor and are now available REAL cheap.

"Dream as if you'll live forever. Live as if you'll die today."

James Dean