Sunday, June 26, 2011

Technical Analysis for Nifty


The Markets had a typical short term turnaround in the end of the last week's trading. It catches most retail participants like a rabbit in a torch light ,frozen,surprised and a sense of disbelief . Mature traders having their systems in place are able to cut their wrong positions fast , some even reverse but foremost they save their trading capital and lock in their profits and let the price action decide their decision . Such reversals emphasize the importance of a trading system , sensitivity of it , rules set for trading and discipline to follow it.

"The Secret of winning the Big game is to loose the least amount possible when one is wrong  ".

1. Indicators :

The Hourly chart has moved into Overbought region and is likely to give a retrace to this recent upmove at some Resistance.


The Daily chart had given a Buy signal associated with a positive diversion of MACD. Its now trading above the Mid B.B. of 20dma at 5450 + level. The Top B.B. is near 5650 level.


The Weekly chart is also similar to Daily one but trading below the Mid B.B. at 20wma at apprx .5560 .



2. Moving Averages :

The alignment of Important Moving Averages is still Bearish but importantly the prices have closed above the 20d ema at apprx. 5425 . Immediate Resistance is at 50dma at apprx. 5540 .



3. Trendlines and Pattern :

Keep an eye on the Hourly Trendline supporting the upmove . It may  support further upmove or break of it may change the short term trend.


The Daily charts have given a breakout above the Trendline .


The larger Pattern on Daily charts is of a Descending Triangle now .



4. Volume Profile :

The Volume Profile chart marks the imp. Volume Nodes . Broader range is 5485 - 5280 for any significant Trending move to unfold. Supports for retrace are at 5415 and 5320 . Price action at these levels should be observed for further trading.



5. Fibonacci Levels :

The Prices now may retrace the downmove since 5944 to 5195 in this upmove . The chart is marked with Imp. retrace levels.



6. Option Analysis :

The Option data now suggests a strong Support at 5400 and Resistance at 5600 level. So we are in the old range of 5400-5600 again. What catches the eye is the 130 % addition of the Puts at 5500 strike . Do they suggest an Expiry above 5500 level ? 



7. FII Data :

The FII' s have turned net Buyers in cash markets since last two days . Though they still remain net negative for this Month till date.


8. Elliott Wave Analysis :

The EW suggests an upmove in the short term in the wave B of the zigzag. Please check out the details in the last post at - CLICK HERE 



So corelating the above data , an educated guess to trade next week may be -

- The Short term Trend is Up above the breakout level of 5320.

- The major Resistance to upmove may come in the range of 5540 - 5570 (which has the 50dma, 20wma and Fibonacci retrace level in it ).  If long ,then profit booking may be done here.
Of course this level will come only on trade above the volume node of 5485.

- The Support to the upmove will come at 5415-5425 and below at 5380 . One may  reneter Longs here but with a strict s/l .

- The Targets to the upmove above 5485 are  5570 and 5650 level.

- Shorts below 5320 only now . 

- No Positional Trade can be suggested in this zone for any side.

- One may manage the trades keeping 5485 as the SAR (again !!!) for this week .

 As its the Expiry Week for the June series coupled with the ST Reversal , expect a volatile week ahead . Trade with caution !!!

Believe nothing just because a so called wise person said it, believe nothing because some one else believes it . Focus more on response than outcome , have in mind what your response will be if Market does that rather than caught in the wishful thinking of Market's outcome.

Alan Farley writes - "Experienced traders control Risk , inexperienced traders chase Gains" .

16 comments:

jagannathan said...

what is the effect of large open interest in 5200 and 5300 puts?

AAR VEE said...

@Jagannathan-

It shows the buiding up support at these strikes since the last week.As nifty is above 5400 and this also has almost comparable O.I.,it may prove to be a good support in this week.

Debdeep said...

Dear RV, Thanks a lot for your al effort. It's again a beautifil piece writeup. Btw, as per Piyush the whole up move 5944-5195 may be corected. I have a doubt here currently 5944 is the point X as per your chart. Now can this corrective wave may move even above this point X?

manojag said...

AARVEE,
Quite a comprehensive analysis. To me the move from 5252 looks impulsive rather than corrective. The markets may surprise every one as it over comes all the walls of worry and also majority of the analysts are bearish at this point of time.

AAR VEE said...

@Debdeep-
Thanks,
The X wave is also the start of wave A of the Y .The B can cros the start of A if it is irregular.
One should use EW as a guideline only and decide the trading on prices only.

AAR VEE said...

@Manoj ji-
Thanks
Rightly said ,the boat got rocked because of lot of bears moving at one end and tilting it.:))

We can only have a primary view and keep developing it.

Surprise is what the market does regularly to provide gains for the minority controlling the markets.we can only align with them for a part of their journey to lock in some gains :))

piyush sharda said...

wise saying rv lets see when i learn.

mridul said...

i dont know why all surprised by this up move while on charts we could see bullish divergence developing and a bullish flag on candlestick chart and i said ...why every one is bearish and not talking for shortcovering and relief rally and as expected oxygen comes to resque bulls.after all both bulls and bears nedded for the game to continue. again gud analysis of all the points R-V thanks.

AAR VEE said...

@Mridul-

Yes u were very right in pointing out the bullish signals and calling for the short covering rally.
Keep it up and keep sharing ur views.
Thanks

santosh said...

AS PER ASTRO VIEW U SAID FORM 26/06 TO 17/07 MARKET WILL SEE A NEATIVE MOVE SO IT CAN TAKEN AS 5570 IS CHINA WALL AND A BIG FALL IS EXPECT

santosh said...

FEW DAYS BACK WHEN NIFTY WAS AT 5450 THEN SGXNIFTY MADE THE HIGH OF 5736 AND NOW AS PER WOLF WAVE PATTERN WE CAN GO TO 5780 LEVEL SO IS IT EVERYTHING IS PLANNED BY FII

AAR VEE said...

@ Santosh -
Thanks for sharing ur view.
All other theories except the technicals should be taken with a pinch of salt.People may analyze markets by many methods as time cycles,astro ,gann ,ew etc but ultimately price and volume will determine the course of action.
so rather than carrying any strong bias react to what market does.

bizagra said...

Dear aarvee, we hav got a HVN at 5530 now, can we use as SAR now??Is this method correct??Just for learning..Thanks

KRG said...

hi; all theories including technicals should be taken with a pinch of salt since the indicators follow and donot lead price !

Santosh: The mood was indeed bearish around that date; but not the price and that is why we have a decent short squeezing bounce.. :)

AAR VEE said...

@bizagra-

U have rightly pointed out.5530 is HVN in 1d,2d,5d,10d TF yesterday.
The SAR should be upped from 5485 to 5530.This is the correct method to lock in profits if going by SAR method.

But as there is a -ve diversion in hourly charts ,with overbought conditions,prices at BB top ,and near od resistance of 5605,one may start booking longs (if any left )and try for aggresive shorts with strict s/l .

remember the prices are in uptrend in short term , shorts should be light and booked out fast.

AAR VEE said...

@KRG,

Similar to Indicators, we also cannot lead the market :)) but can only lock in profits /cut loss based on some trading system with which we are comfortable.All trading systems will point to a price where it suggests a cut off .
Importance is of consistency ,discipline and management .

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