Sunday, July 10, 2011

Technical Analysis for Nifty

The coming Trading period for the Next Week (or two) may be quite tricky as the sustained upmove since 5195 slowed down last week ,made a dash to 200dma and corrected down. The next phase will be the Tug of War ,Testing of Levels and Whipsaws.

1. Indicators :

The Weekly Indicators are still Up and are yet to exhaust in the overbought zone or show any signs of reversal . The Top B.B. is near 5900 level.
The Prices are above Mid B.B. and may test or whipsaw them.

The Daily Indicators are on the way Down from Overbought zone after giving a Negative diversion.

2. Trendlines and Pattern:

The Prices Resisted at the Top Trendline of the Triangle in which they are moving since the start of this year.
Breakout will come on close and trading above this line.

Check out how the Price range of 5600-5610 has formed an important barrier. It resisted the prices before and now has acted as a support during the last week.
This Week may see it being tested again or being whipsawed.

3. Volume Profile:

The 10d Volume Profile chart shows 5625 level as the level with the highest volumes.
Initial Support comes at 5650 level which is a 5d HVN and initial Resistance at 5715-30 from which the selling came on the last couple of trading sessions. The reaction at these levels will decide the further course of trading. Remember that 5530 was a previous HVN that supported the recent upmove.

4. Option Analysis:

The broad range of trade is 5500-5800 going by the Open Interest accumulation of Puts and Calls. Now the narrow range within this looks like 5600-5700 initially, with aggressive writing of 5700 calls (calls exceed puts at this strike) and that of 5600 Puts( puts exceed calls here). Closing below 5700 on Friday makes the bias down in near term.

5. FII Data:

There has been sustained buying since last ten days of the June and continuing in this month too. Liquidity flow of such kind will alter even the medium term outlook.

There has been a similar upmove in the end of the last two Quarters too ( in Dec’10 and March this year ) only to fizzle out in earnings season and making new lows later. Looks like some window dressing by fund managers .

6. Fibonacci Levels & Moving Averages:

The Downmove since 5944-5195 is being retraced up and resisted at 200dma in Short term.

Now this Upmove since 5195-5740 will be corrected down in the near term.

Important level that may act as Support and Resistances are marked in the charts along with important Averages.

7. Elliott Wave Analysis:

Please check the Basic EW Insight that I have been following –  Click Here

We may have finished the wave ‘a’ of the larger B wave in the second zigzag (Y) and are in the wave ‘b’ of the B . We may now be near the end of the first leg of this wave ‘b’ , which will correct down in three legs.That implies a correction within a larger TF correction. The two Fibo. Chart above show the likely targets for the larger B and smaller wave ‘b’ respectively.

There is a probability of testing 5700 levels , recent high or exceeding the high in the second leg up of the wave ‘b’ and touching apprx. 5500+ levels after it . One has to be cautious if it whipsaws the high near 200dma as its likely to come down again in the near term.

Corelating all the data and analysis above ,the perspective for Next Week’s Trading may be as follows :

- The Trend in short term is up but in near term is down.

- The trading will be tricky as mentioned above with possible whipsaws of imp. Levels and SAR. The range may be 5500-5800 apprx. with max action in 5550-5750 area.

-The Initial Support for the Week is at 5650 level and Initial Resistance at 5730.

- Below 5650 level (which also is 5dema and 5Whema) the Trend will weaken in near term and will test the 5625-5605 level. (It is a confluence of Fibo.No., Breakout level, HVN and 5dlema ) .

- Below 5600 level , 5530-60 area (which is a previous HVN level, 20dema, fibo and Gap area) will provide Support.

- Above 5730 there is a probability of whipsawing 200dma level and trading near 5785 .

- One may trade keeping the above insight and 5625 as SAR for next week , managing it for profits at levels mentioned .

The Technical Insight cautions us to avoid Positionals and Trade the levels within the Range mentioned. Have light positions and trade nimble .


mridul said...

thanks rv again for all the points taken into consideration, ys 5611 is the most important support below but if we see the negative diversions the at last high of macd h price was near 5566-77 so i feel that nifty may correct up to that and can bounce from that if 5611 broken.u r right again very tricky week ahead but since weekly indicators still not exhusted so for the week we can see recovery if cay dip comes.

AAR VEE said...


Thanks for sharing your views.Range trading and booking out at levels will help this week.

jagannathan said...

as said by you today nifty touched 5625 and moved above.
what a calculation superb

AAR VEE said...

@Jagannathan ,

It was a HVN level in volume profile. One has to check the reactions at imp levels and trade ,like 5650 has been broken early in trade etc.

The analysis is an insight for whole week (not intraday)and should be read likewise.If some new developments come by .I will update.


Kumar Technicals said...

Dear RV!

What a beautiful picturisation of charts & everything. Due to some hectic schedule i could not see it yesterday, thanx again for ur sincere movie.



AAR VEE said...

Hi Kumarji-

Thanks for the appreciation. Good wishes of humble persons like u keeps me going.


saravanan said...

sir as per ew pl draw next target with graph [5/a /iii what next?]

AAR VEE said...

@saravanan -

Please check the next post.Thanks