As anticipated nifty opened down moved further down in the beginning of the week and suddenly unanticipated it made a very good reversal on Wednesday afternoon and there after started to move up marking a spectacular recovery. Nifty moved below the 15 day EMA and then taken support near the 50 day EMA at around 4350 and then made a spectacular recovery and moved above the 15 day EMA eventually. As nifty is above the 15 day EMA the strategy should be go long on every fall. 15 day EMA is at 4529 till it is broken you should be long on every fall and if it is broken in the beginning part of the week then we can short on every raise. So the pivotal value will be for the current week will be at 4529, but nifty has taken support at the 50 day EMA and then moved up very swiftly so till 50 day EMA is respected we will have no problem for bulls if it is broken then bears will take charge in a big way. So keep a very close watch on 15 day and 50 day EMAs as any violations of the same will have a big impact on the indices. Nifty this time also finding it difficult to go past 4600 decisively indicating further that market is not so strong as it appears to be. So it appears that 4600-4750 appears to be no-trading zone for the time being. Any break of nifty of 4750 decisively and with heavy volumes is a clear indication of bull move but we have a very huge Fibonacci resistance at 4850-4900 where in 61.8% resistance of total fall from 6357 to 2227 is there. So any break of 4900 is surely very very good news for the bulls and on the break of 4900 nifty will break away to a major bull territory. This time also the raise of last two days is on less volume putting doubts on the upward movement of the indices. We are witnessing a very unique phenomenon during the last one and half month as the both raise and fall are not associated with heavy volumes giving a clear indication that market is undecided and which every direction it moves it would be on a very big scale. So keep a very very close on volumes when seeing for clear break out and also keep a close watch on DMI which give the strength of the trending market. If you have been following my writing I have indicated that we have completed 5 months and 21 weeks of raise and we should now patiently for market to give a clear indication and just trade/invest in that direction. So keep you fingers crossed. The bias still appears to be down till 4850 is taken out decisively.
In the above chart it is not clear what nifty is forming, either a flat of an expanding triangle. Flat I have explained two to three weeks back in this case we might see nifty correcting after reaching around 4650-4750 levels to wards the 3900 levels. There appears also another option of expanding triangle as has been indicated above and in this case the volatility should increase as we progress towards completion of the same. In this case we might move toward 4700-4800 levels the fall very swiftly towards sub-3900 levels and then there after move up toward 4800 again to correct from there. So we are yet not clear what pattern the indices are forming so we have to keep a close watch on the 50 day EMA or 4400 levels which happens to be a crucial decider for nifty. It appears that in a week or two nifty will surely give a clear directional indication. If we are forming a expanding triangle then it might take another month or two to complete the same.
Directional Momentum Index: DMI is has moved from 17.10 to 14.70 and has just given a buy signal i.e +D has moved above -D. The downward movement of DMI is a clear indication of lack of direction. Wait for the DMI to move above 20 to give an trending indication. So keep a close watch on DMI as it is expected to give a clear indication of direction in coming weeks.
Pivot Point Trading Strategy
It can be seen from the above that nifty is above the weekly and monthly pivot indicating that bulls are still in charge of the market. So as per this strategy, the trading levels of nifty are between 4259 to 4680/- in the coming week.M.Sri Mahidar
Sunday 16th August 2009 Time 7:27:45 PM IST.
Trend is friend.
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