Been a little busy with my business, hence couldn’t update the blog for some time. I am into the business of selling flowers (Wholesale) and the time for me to make my bread and butter for the entire year is from September till February end! Anyway that was about me, and now let’s talks about the market; the last week has been a nerve wrecking one, it has not only destroyed the wealth of the investors but more sinister effect has been on their psyche. This will take a lot of time to heal and should also serve as a very good lesson on market mechanics for times to come. Once again it has been a humbling experience and I presume will make a few of us wiser (those who choose to learn from History) and for the people who tend to forget things quickly they shall be condemned to suffer again.
We as usual begin by looking at the weekly chart and see what the broader picture looks like. We are moving down very nicely inside the falling channel and seem to have taken a support there; a breather or maybe as some might describe it as a brief stopover. The indicators are highly oversold and warrant a quick pullback. The MACD histogram is showing a good bullish divergence (so far so good) and nice rally to 3550/3800 is not ruled out. As for the downside I shudder to comment on supports because every support so far has just plopped, but a safe guess can be the 2006 lows at 2890 which might break the fall. It might not do it for technical reasons, maybe for psychological reasons! Any way I have inlayed my weekly chart with a scarier picture (scary! It aint scary anymore since we all have become comfortably numb!)
This brings us to the daily chart; the price as drifted too far apart from the moving averages and should pullback to align with them. This can be achieved in two ways; either the price makes a sharp pullback and tries to kiss the 20 periods MA or at least make some sideways movements and let the MA come near its vicinity. ADX is showing good strength and with +DI below the –DI there isn’t much to say. Again I repeat there isn’t much we can guess about the supports and as regards to the resistance, we have had so many gaps lately that the overhead path is strewn with these gaps providing solid string of resistances.
The hourly chart below presents a more microscopic view of Nifty. A very nice illustration of pivot play; LL’s and HL’s, it is also observed that right through the last few days we have been consistently trying to pullback and try and kiss the falling 20 period MA (the green line). Therefore in all probability if manage to surpass this hurdle tomorrow we may have some good up move for us.
I am not particularly in favor of day trading (the reason is personal because I have often been very uncomfortable with it) but presently day trading looks like the only thing to do. With so much of news (muck) floating around it’s becoming increasingly difficult to hold on to your swings or your beliefs or for that matter your SANITY!
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