Sunday, May 29, 2011

How to Trade Nifty now ???


UPDATE : 31-05-2011

1. The upmove came as expected but did not give any resistance near 5525-50 levels.Shorts are there in the system (futures discount ) and will be taken out before any meaningful retrace of this upmove.

2. We are approaching a cluster of Resistances at 5590-5635 levels, the Trendline at 5590, Pivot high at 5605, Fibo retrace(50%) at 5625 ,100dma at 5590, 50dma at 5635, Weekly high5ema at 5605 , Daily Pivot R1&R2 at 5591,5622 and Weekly R2 at 5587 along with Upper B.B. at 5605


It will be prudent to book out Longs created for short term here and re-enter at any retrace to 5480-5500 levels or on closing above 5635.

3. The Indicators of 30 min and Hourly charts are in Overbought zone now.

4. The SAR for Positional longs can be now 5480 level.


5. The EW count developing for this recent upmove shows that we may be in the 5th wave which may get completed soon. We can expect a retrace after that.


6. Caution is suggested by big ticket buying of FII's today (in excess of 1300 cr.) for this upmove to continue further.
One should be cautious in building any short and keep strict s/l for them .   

Read carefully the Analysis below for the broader picture -


The Technical Analysis of Nifty will help us formulate the Trading Strategy for the Next Week.

1. Indicators :

The Hourly chart is in the Overbought zone so a correction of the recent upmove is expected. A resistance near 5520 level,the last Pivot high is expected.


The Daily Chart is giving a Buy signal after recovering from the Oversold zone and giving a Positive Diversion in the RSI and MACD Histogram. Closing above 5490 ,the Mid B.B. will be positive to trade for the Upper B.B. target.


The Weekly chart is trying to recover from the Oversold zone and is ripe for a Buy. The upmove may be stalled near 5600 level of Mid B.B.


This implies that there may be a correction in Hourly charts which may be met by buying for further targets .So a Buy on Dip approach for Near Term Trading.

2. Trendlines :

The Trendline that got broken recently may act as a Resistance to any upmove ,which comes near 5525 on closing basis.


The Trendline on the Hourly chart above also should be watched for Support or break of trend in the upmove. Its showing support above the 5400 levels.

3. Fibonacci Levels :

This upmove may retrace the recent downmove since 5924 levels. The Retrace levels of apprx. 5550, 5625 and 5700 will act as targets as well as resistances. Price action should be watched closely near these levels.


4. Moving Averages :

The Weekly low 5 ema near 5445 may act as a Support where as the Weekly high ema near 5620 level may act as a Resistance for the Week , which is also near apprx. 50dma level and Monthly 5ema.

5. Volume Profile :

As per the 10d Volume Profile ,5430, which is also the Weekly Pivot , may be treated as the SAR this Week. The support comes at apprx. 5380 level.


6. Options Analysis :

The Options data built up for the June series shows a broad trading range of 5400-5800. The initially struggle area would be the 5400+ to 5500+ range , the strikes with max. Volume on last trading day. The range may get extended to 5600 levels further, which is the strike with max. Call O.I. before 5800.


7. FII Data :

The last two days of trading have been supported by both the FII and DII buying .


8. VIX :

The VIX data which indicates volatility and acts as a contra indicator, is trading in lower part of the range , which generally signals a upmove or consolidation in a range .


9. Elliott Wave Analysis :

The EW analysis is also signalling a probability of a range trading - CHECK HERE



10. So a likely Weekly startegy based on above data and analysis may be as -

# Short term may be up, above recent lows of 5328.

# Initial Resistance upwards is near 5525-5550 zone.

# A Buy on Dip near apprx .5430-50 can be done.

# The target above 5525 closing may be apprx. 5600- 5630  .

# 5430 may be kept as SAR and traded for this Week . 

# Close below 5380 will have Bearish implications as 5400 levels looks a good support area.

Have a Profitable Week ahead !!!


17 comments:

Rajib said...

Welcome back after the short recess. :)
Once again nice analysis and nice confluence of the levels. That makes the understanding of technicaly challenged people like me pretty easy.

Lakshmi said...

Dear Aarvee

Thanks for your crystal clear analysis. I beniftit a lot from your analysis.

Regards

Mohan said...

Hi Aarvee,
Thanks for the post and also for visiting my blog other day and leaving the comment.
http://technicalanalysisofnifty-mohan.blogspot.com/

Cheers
Chandu.

AAR VEE said...

Hi Rajib ,

Its nice of u to visit here and be active in the blogosphere again.
Thanks for the comment .

AAR VEE said...

@Lakshmi,
Thanks for the positive comment.

Hope the analysis helps in trading.

AAR VEE said...

Hi Mohan,

Welcome here and thanks for adding my blog at ur place.

Sujatha said...

hi Aarvee

am not able to do fibo set up in chartnexus :P wat to do??

any tips?? time permits

regds

Breaking good news _ School opened today for my "D" :)

AAR VEE said...

Hi Sujatha,

Chartnexus has a drawing tools window.(icon on main menu ,click)
Fibo. tools are in 2nd row ,third icon(click).go to fibo retrace in that click it then on charts drag the mouse with left click between two pivots.u will get the reqd.

Let me know the feed back.Alternatively u can download the manual from the 'help' in nexus.

ATB to your Daughter and urself for the new session.

bizagra said...

Dear Aarvee, any idea in which subwave we are, is it b of correction or still a???
Wht is the level now to enter longs again??
Thanks

AAR VEE said...

Hi bizagra,

we may be in the v-5-a-2 in the shortterm now.
u can read the update posted yesterday and EW analysis of weekend for broader picture.
Let this wave end then enter at retarce 23% -38% of the total upmove.
if ends above 5600+ level then 5550-60 level may be good to enter.
but keep the positions light and be quick to book profits as its only corrective upmove.

bizagra said...

Aarvee , i hope we are in 2-b now, one up 2c is still left where we can short.m i right????Thanks

bizagra said...

One more thing, 5565 is having a high volume bar, can i take it as SAR for intraday moves on friday??Is this correct method??Thanks

AAR VEE said...

@bizagra,
ya we may be in b-2 (the three wave correction for the 5wave upmove since 5328-5595 apprx) ,after finishing it (may be near 5480-5520tmrw), there may be c up later tmrw or next week.

why short?? who knows the correction pattern to unfold and the time for it,whole of this a-b-c may be a of single wave A followed by B and then C.people get trapped like this only.:))thats why its said follow the trend or price ,personal bias and wishful thinking are the biggest traps .
Also EW is quite subjective and flexible take it as a indicator and not definitive . go short only on close below dlema or SAR decided then.

I dont track intraday moves and trade them so no comment on that .My positional SAR is 5480 now as mentioned in the post

AAR VEE said...

@bizagra,
alternatively we may have completed the a of the correction from 5597 in three waves dwn today ,the b comes tmrw up and then c down again in early next week .This whole completes the b-2 and then we move up in the c-2.(may be a zigzag wave 2),but instead of guessing lets put stress on our position sizing and SAR

piyush sharda said...

good analysis rv and getting better by the day :-)

AAR VEE said...

Thanks PS for the encouraging words.still learning and a long way to go.

FIRE said...

@AAR VEE,

Any change in your stance? Or buying around 5480 is still a viable option?

Share
Subscribe