Reliance On Sticky Wicket!!!

Reliance (RIL) is very critically poised. Let us take a look at the daily and the weekly charts of RIL. On the weekly chart RIL has broken a multi year trend line, and closed below it. It is also trading below its 13 and 26 week EMA. On the daily chart it has formed a rounding top from mid march till now. Same can be seen on the hourly charts below. 2100 for now is lifeline for RIL. A short term technical bounce from here cannot be ruled out (positive divergence on hourly charts). I make this assumption because it is already trading on the lower channel and far away from its value area (the EMA’s) and is bound to be pulled back there. In fact this pull back can be a good shorting opportunity. On the flip side breaking 2100 on weekly basis opens further downside to 1800 and 1600.

Nifty Recap For The Day!!!

This opening was expected considering the fact that Dow was butchered on Friday and surging crude price. The effect was global and most of the Asian markets also followed suit. We were no exception. The only difference was that over the weekend most of the people were rambling something about Black Monday and lower circuits etc. We did fall but lower circuits?? Na not yet! You see the difference between the fall we had in January and now are that the former was more a culmination of euphoric rally where many participants were caught on the wrong side. Adding to their woes were margin calls which did more damage to the accounts and some were wiped off completely. In this fall we are seeing gradual decline and most due to the selling in the cash market and lack of any buying conviction. Now moving on to today’s Nifty action. Like I said we just opened inline with global cues. It remains to be seen what will be the follow through of this move, considering the fact today was more of a domino effect. We have pricked the lower support levels and now it needs to be seen weather this prick will hold or break the ground below. If the overnight cues get to be positive then one should use the rally to book profits and stay on the sidelines. If Nifty spot trades comfortably above 4530 then one can take a small long position with a tight stop loss at 4500 and play the intraday strength (pullback).

"You may be disappointed if you fail, but you are doomed if you don't try."

Beverly Sills

Nifty Recap For The Day !!!

Another roller coaster ride today! If yesterday was a positive reversal bar then today it is the negative reversal bar. Nifty opened inline with yesterdays close and the global cues were great too! But since we get our Inflation figures every Friday, we moved in a tight range till 12 p.m. No major impact of the numbers as it seems the market is discounting these figures but what it is looking for is the broader implication of these figures. Any way if you take a look at the 5 minute chart we seemed to have made a very nice rounding bottom for ourselves in the first half of the day. And if you look carefully at this formation in conjunction with the last three days action (5 minute chart) then this rounding bottom was the right shoulder in our inverse H&S. This formation would have got many a people excited and lured them to take a long position in anticipation of a breakout. But as they say it’s not over till it’s over….the price never broke the neckline and reversed. It is also said when a pattern fails then the move in the opposite direction is very fast and severe. Once again 4620/30 had a role to play and we took support there for the day. On the daily the ADX is getting aggressive. As of now the high of today and the low of yesterday hold the key to the further direction of Nifty.

"The less effort, the faster and more powerful you will be."

Bruce Lee

Hmm no wonder the stocks fall with a very little effort and the fall is powerful!!!

Nifty Recap For The Day !!!

So we did have our little pullback. But this was after much mid day drama. Nifty opened flat. We took our first swipe at 4620/30 level (roles reversed the support till yesterday became resistance for now). After the second failed attempt to penetrate we tested the days low and then broke below and proceeded to make a new low for us. Incidentally this was happening when news of Prime Minister resigning were flying thick in various chat rooms and forums. This created a panic among the retail traders and the professionals had a field day in their fishing expedition. This particular move kicked both the weak shorts and weak longs. With a positive cue from European market, Nifty proceeded to complete an inverse H&S and finally broke out of the 4620/30 congestion to close on the higher ground. On the daily chart we can call this a Piercing Candle and for the people who follow bar charts this can be termed as Positive Reversal bar. The low of this bar assumes a lot of significance as any negation of this bar will lead to a severe fall. A retest of 4620/30 is not ruled out for tomorrow. On the up side we have strong resistance at 4730/70. It might be a volatile session and much awaited Inflation figures at 12 p.m. will set the tone for the day.

"Do not confuse motion and progress. A rocking horse keeps moving but does not make any progress."

Alfred Montpert

Is this just a motion in nifty or progress????

Nifty Recap for The Day!!!

Poor Nifty “Lows to lows, dust to dust if inflation doesn’t get her Left must”. This is what happened today! The government decided to bell the cat and hike the much needed oil prices. Tough choice in an election year, with their coalition partner (THE LEFT) denouncing the hike and announcing week long strikes (these are nothing but paid holidays!) things aint going to be easy. You see the market doesn’t like uncertainty and most important it doesn’t like government meddling too much. Now moving on to today’s action; Nifty opened firm and was list less till about 12 p.m. when that all important news announcement came. It looked the market had already discounted this news of price hike (it was just waiting to see what percentage the hike would be). There was a sharp spike and then news of Left (usual blah blah!!!) all over the channels. Technically we retraced and failed to claim the highs. The small little M you see on your 5 minute chart did the initial damage and after that it was domino effect. The 4625 which we had so assiduously protected yesterday also went for a song. This is a place where the system now has built many shorts (in fact these are new aka weak shorts). Any positive trigger will make these shorts scurrying for cover, which in short will be a pull back rally. Another important observation is that our man ADX seems to have woken up and stealthily moving up. For now this signals the strength of this down move is getting stronger.

Below is the chart of Reliance (courtesy Shiree Mamgain); this shows the 2B set up from trader vic’s book I had earlier posted in my blog titled Little Trend Line Trick. See how this simple set up gave a very good trade!!!

"Experience is what you get when you don't get what you want."

Dan Stanford

Hmmm that’s why I was wondering what I was getting when I wasn’t getting money in trading; EXPERIENCE!!!!