Technical Analysis for Nifty

The Larger Trend is still down and we are on a cross roads for the Short term where the bounce started on Nov. Expiry day may continue or we again slide with the Larger Trend. With combination of the methods used , we will try to get the Trading Insight and levels going ahead.


1. Indicators :

The Weekly chart is still in the Sell mode suggesting that Larger Trend has some downside left.

The Daily chart shows sign of exhaustion in oversold region with a Double bottom at 4640 apprx. and a Technical bounce on.

Until some crucial levels are not crossed going Positional Long based on these indicators may be premature as Larger Trend may takeover again.

2. Trendlines :

The Daily charts have been moving in a Channel Pattern since Nov'10 high of 6338 ,which has been followed in the Blog earlier also. The Long Term Trendline drawn from Oct 2008 low joining March 2009 low is where we are resting currently.  

In a DownTrend Supports give way sooner or later . If the 4640 level ,which now is a double bottom support fails to hold , we will be moving towards the Channel Bottom Trendline Now placed apprx. at 4450-4500 level .

3. Moving Average :

Please refer to the Weekly chart under Indicators , Last week was the 52 week lowest closing and this close was below the 200 week Moving average mark . One may note that , it closed once below it from where the rally to 5400 materialized , but now it gives Bearish signals.

This level of 200wma at 4778 will be important level for Positional Traders.

4. Volume Profile :

Price and Volumes are the only absolutes in the Market , Volume Profile serves both in the Chart and hence is an important tool for trading . The 10day Profile now shows the POC at 4750 level .

This level of 4750 now on Closing Basis will be sign of Short Term Reversal.

5. Options Data:

The Options Open Interest data shows the Largest accumulation of Puts at 4500 and Calls at 5000. This may be the broader range for now. 4500 level is where the Support is expected. 4700 is the next level with Puts O.I. which may now be the intermediate Support level only. The number of Calls exceed the Puts Only at 5000 levels , which is expected as safe level by the Call writers as of now. This also tells that bounce rally if materializes will be fast towards it .

6. FII Data :

The FII's have been consistent Sellers and have sold even in the bounce from  4640 levels in the Cash Market . Though the Derivatives data shows the cautious Hedging by them in this bounce. The Global factors along with $-INR relation is abating the withdrawls by FII's.

7. India VIX :

The contrarian indicators of the Volatility Index is now above the Range marked and normally indicates nearing of Bottom at higher levels . 

8. Elliott Wave Analysis :

The Basic Long Term EW count followed by me can be referred - Click Here

The Updated broader Counts may be followed - Click Here

Now Since 5400 ( XX) we may be in the A wave of the 3rd Zigzag . This wave is unfolding in 5 waves down structure and the 3rd wave has extended. We may have ended the A wave leg at 4638 level and Now in B wave up or Preferably in the 4th wave now. ( Red Count ) . 

The 5 min count for trading this week is suggesting that either 4th has ended in the A-B-C waves and 5th down has started in the last session or this 4th wave is in the B wave with a leg up remaining.

Now if the C-4 is due ,the Targets / Resistance for the Bounce are shown in chart below at 4800 and 4900 apprx. They also have Gaps left while coming down and almost are the C=A and C=1.62A target.

Alternate count of being in a B wave of zigzag will be discussed if we reach near 4900 in the bounce.

So , by the above Analysis - if 4640 holds we may see an upmove to near 4800-4900 levels in the Short Term , But Larger Trend being Down points towards 4450-4500 levels sooner or later.