Nifty has been trading largely in the 5400-5600 range since last five Weeks. This Week may also see the larger part of the trade in this band . Let us have a Technical watch through various methods and co-relate to get a Trading Strategy for coming Week.
1. The Indicators on the Daily chart are yet to exhaust in the Oversold zone ,where as that on the Weekly chart are giving a Buy signal . The Daily chart prices are supported by 20dma at Mid B.B. ,where as they are resisted at 20 Wma in the Weekly.
2. The Moving averages indicate that the Long term TF is down below 200dma as well as Short term trading below 5dema and 5wema, though the important level of 5wlema is protected at 5450.
3. The Trend line in Weekly charts since Nov'09 is supporting the prices on closing basis.The support now is at 5400 level apprx.
The Daily charts are forming a Falling Wedge pattern ,the break of which on upside may once again test 5600 level.
4. The Fibonacci levels of the retrace of the recent upmove since 5328 are suggesting immediate support at 50% level of apprx. 5460 and then at 61.8% at apprx. 5430. Upmove can come above 5535 level. Check the above chart.
5. FII data this week has been arbitrary with no clear direction.
6. The Options data indicate a broader range of 5400-5800 but action in 5400-5600 range. Aggresive Call writing at 5500 and 5600 strikes are likely to cap the upside .5400 strike Put accumulation shows a strong support here.
7. As per the Elliott Wave Theory , the short term probability that is being followed can be - CHECKED HERE
We may be trading in the 2nd wave of the larger C wave down.
This 2nd wave may be in the B wave .
The B wave may be in the W-X-Y correction which may be in the last leg of Y.
Check the EWI illustration for the W-X-Y corrective -
8. Imp. Events that can trigger the short term move coming up in this Week
- Full Lunar Eclipse on 15-06-11
- RBI's mid quarter monetary policy review on 16-06-11
9. The above Analysis suggests that following should be kept in mind while Trading the next Week :
- The Short term bias is down.
- The Trend is Sideways.
- The range is 5400-5600.
- To trade the reversal in short term , check the break of down Trendline in Hourly charts and Daily charts upwards as well as trade above 5dema level.
- Risk - Reward for the short term increases on buy near 5430-60 levels.
- As 5400 is a strong support , strict s/l for any buy should be kept below 5400 ( specifically 5380 level )
- The Resistance to upmove may come at 5535 - 50 level. and then near 5600 level (or 50dma).
- Closing below 5400 level , the Down trend will get accelerated.
- Positions have to be kept light and trade to be done between imp. levels for quick ,small profits.
- SAR for the Week may be 5550 level .
Trade Light ,Nimble and with Caution this Week !!!
Join me on Twitter for updates - CLICK HERE