Weekly technical Analysis for week ended 30^th May 2014

Nifty during the week opened on a high note moved up and made a high of 7428 on Monday and there after started to move down and all during the week the market was forming only red candles and moving down and it made a low of 7118 and finally closed at 7229. Whole during the week the market was in the range of the 16^th may opening candle only. During the last two week the market was in the range of the opening candle of 16^th May (election result day) and on Friday it moved below the low of the 16^th may candle. The movement in the range of the candle is indicating the there is some amount of selling coming into the market in short term as at every rise selling is coming. The long tail on 16^th itself is indication the heavy selling has gone into it and it would require an fair amount of buying to move above the high of 16^th of may. This week the market has touched 20 day EMA and the moved up this has happened 3^rd time during the last three months. Every time it touched or moved below heavy buying has come. So we have to see whether we move below the low of 16^th may or not. Any close below the low of 16^th may candle is an indication of weakness and we can see market moving further down as it would signal the movement of market below 20 day EMA. So we have to keep a close watch on market this week. Also we have RBI credit policy this week which would give the idea about the new governments view. The budget is going to be presented in second week of july, so whether the market would correct till then and then move up only we can speculate. Governments view and policies would be out only in budget, So FIIs should be waiting on side lines till that time. And they would jump in if the budget focuses on growth so we have to wait for budget to complete to see for a major move. My view is that we might not make a new high till the budget. But as I say price is the king.

 Above the chart of the nifty for last 2 years, it can be noted that the nifty has broke the trend line of last two years in the month of may and move up and made a new high. But generally when the long term trend line is taken out the market move up comes down takes support/breaks the trend line and then starts to move up and that would be the genuine move or a perfect technical set up. If this is being set up then we can expect the market to move below 7000 towards 6900 levels and then start an up move which can take it to a new high. We have to see the same.  The important event would be when the market takes support or breaks the trend line on down wards. So that event has to be watched with utmost care.

M.MahidaRSri

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