Technical Analysis of Nifty for Short Term

Wishing All A Very Happy Independence Day !!!

Let us analyze Nifty for Short Term to get probabilities of what is in store for a couple of weeks ahead , say till August series end.

1. Indicators :

The Daily chart Indicators are in Neutral with some upward bias as shown by MACD histogram and Stochs. But one should remember that no reversal will take place till the Weekly chart signals the same .

The Weekly chart closed below the lower B.B. and the Indicators are yet to exhuast in the Oversold zone. There may still be pain left.

2. Patterns & Trendlines :

The Weekly chart shows the Long Term Trendline been broken and till the Weekly closes above the Top Trendline , no reversal is signalled . For the second week in continuation the prices have closed below the lower Trendline and also apart from forming a Lower High-Lower Low Pivot pattern ,the last Week's High even did not touch the previous Week's Close . It signals bearishness.

The Daily charts show the break of the Descending Triangle and attempt to break the Lower Trendline up which failed throughout the last week. This Pattern has been discussed in detail - Click Here

The Hourly chart shows trading in a range forming a Triangle ,the break of which will decide the trade in this week. Upwards break will try to fill the Gap area marked and lower breakdown below trendline will signal a test of recent lows. The Trendline marked since 5700 may be tested and whipsawed.

3. Moving Averages :

The chart below is marked with the 5d emas . Prices moved up above the 5d lowema but did not closed above 5d close ema in last week. Last trading session again pulled it back below the low ema. Now this 5dlema will act as a resistance and any upmove will only be on close above 5d high ema . 

4. Option Analysis :

Due to high volatility in this series, the Option data may not give a clear picture as a result of several complex hedging strategies by Institutional players. Though a Support is indicated by O.I. at 5000 strike Puts and Resistance by 5200 Calls.

The buildup of almost equal O.I. at 5100 Puts and 5200 Calls in last trading session indicates the preparation for the range break which may be coming soon.

5000 levels may not exactly be a Support but a hedged level only .

5. FII Data :

The FII's have been net sellers in Cash market during the upmove last week . Since last two days they have been sellers in the Derivatives too.

6. $ USD :

The fall in August series is linked to Global uncertainity. It will help to keep an eye on the $ movement . The $ has been going strong against the Rupee since the start of August. The insight of corelation between USD - INR and Nifty can be read in this Post - Click Here   

7. Elliot Wave Analysis:

The basic EW insight , the Primary and Alternate count along with the Targets have been discussed in the ' Long Term Analysis' Post - Click Here

As the chart shows above , We may be in the 3rd wave of which the 4th subwave is on , we may be in the last leg'c' of the 4th up and then start the 5th wave down (Red scenario ). It may or may not fill the gap area.

Or we already may be in the ii subwave of the 5th ,the final leg down of the 3rd wave. (Blue scenario). Not filling the gap and breaking down below 5050 will confirm it. We have retraced the ideal 38.2% levels for a 4th wave. 

Another alternate scenario is that we may have completed the 3rd wave at recent lows of 4950 apprx and are trading in the 4th wave of the C ( and not the 4th of the 3rd). As per this , in the short term we test the lows again and then fill the Gap area . This will be confirmed by holding 4950 levels in this series.

Conclusions:

1. Bias is firmly down in Short term .

2. Watch the Triangle break in Hourly charts for near term direction . ( trigger)

Near term Resistances are 5100 and 5140 apprx.

3. If breaks 5050 or Hourly Triangle down , then can test recent lows . Next move will be on reaction at this level.

If closes below 5000 levels one can be positionally short with  strict s/l . Targets may be 4800 or sub 4800 (as discussed in long term post). Hold & sit tight till Market stops u out. (for Trend Trading)

4. If Breaks the Hourly Triangle upwards then may test the 5200 Level and fill the Gap above it.

But be sceptical of the Upwards move (till closes above 5200 level ). In this case keep light positions and strict s/l for trading up. (for sudden reversals)

5.  Probability that if  the Gap is not filled in next two-three trading sessions or closing above 5200 soon , The Markets may fall by its own weight.

6. Short Term Positionals may trade with the help of 10 d Volume Profile keeping 5170 as SAR.   

Remember 'Analysis' & 'Formulating a Plan' based on it , is the 'Hard Work' which is only one half of the total Trading activity. 'Execution' of Trade & 'Managing it ', is the other half which is the 'Smart Work'.

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