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 !!!