Sunday, April 24, 2011

Technical Analysis for Nifty Trading

Analyizing Nifty through a combination of Technical analysis methods as Trendlines, Moving averages , Fibonacci , Volume Profile, Elliott waves  and Options data to get a Trading Plan for the next week.

1. Last Week moved as expected between the range mentioned in the Post - CLICK HERE

2.  Support  came at the Medium term Trendline and 200dma on closing basis. This chart is important for the Positional trade and reversal is expected below these supports.

Further support in the short term is expected by this Trendline in the Daily charts for upmove to continue, failing which will signal a short term weakness setting in. Also check the Volume Profile chart for short term supports marked.

3. Resistance  comes at the Trendline shown in the chart below , see how this has acted as hurdle for upmove. Upmove will come on break and close above this Trendline.

4. Target  for upmove, above the Trendline, is the recent high of 5945, and then comes near apprx. 6100 level. Check the Fibo levels above.

5. Options data suggest a Resistance near 6000 levels which is the max. Open Interest strike at Call side as well as for both Calls and Puts.

6. SAR  should be at 5885 i.e. the last closing price itself . One may get to trade on both sides , with a Support near 5830-50 below it and Resistance at apprx. 5945 level above it. SAR will change once closes below the support or above the resistance level.

7. Elliott Wave probabilities for the short term were discussed in the  POST HERE

We may be in the Larger wave B which is in its last leg of wave C. This wave C may also be in the 'c' wave or the complex 'b' wave. 

The enlarged 'C' wave may be as follows .

8. Caution  should be at the Trendline Resistance for whipsaws as well as for false breakout if closes above it . Proper S/L should be adhered to. (The option data and EW suggests the same as of now ).
Similarly a break and close below 5830 level will suggest weakness , with confirmation of reversal below 5740 level.

One should expect lot of volatility owing to the Expiry week and should trade light with proper s/l . 

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