Target Achieved.....Nifty Touches 4800 level on 19th August 2011

The target given for the Nifty on 9th August was achieved on 19th August. The Nifty now should find support at 4770-4780 which is a crucial resistance for the Nifty as it is 38.2% retracement from the lows of Oct2008 (2252) to the highs of (6338) on Nov 2010.Incidentally this is also 50 month moving average for nifty.

The Nifty here looks deep oversold one should wait for a meaning full bounce back before creating any fresh long positions. The Nifty will bounce back to cover the window it created with a Gap down opening on Friday, which will 4940 levels, this could act as an immediate resistance for the Nifty, after this Gap, Nifty will face another resistance at 5323 levels, however the possibility is more that the Nifty could reverse downwards once again from 5000 levels as the market sentiments looks quiet weak.

In Nutshell it would be advisable to take each resistance at a time,  before going long on Nifty....once Nifty crosses 5000 levels one can go Short on Nifty at 5100-5150 levels with a Stop loss of 5323 on a closing basis. 

This Chart is a prime example of Window Support or resistance, here the Nifty has made a gap up opening afrom 5092 levels...and is taking a support at the these levels, you can observe the Gap was filled by the Green candle which opened lower however it closed above the Gap support , if this Gap is breached on an hourly closing basis Nifty can then find support at 5050 levels and then subsequently at 5011 levels which are weak supports..

In short if the 5092 levels are broken in hourly closing basis one can create fresh Shorts as the overall Trend of the Nifty is weak (Refer to the earlier post on 9th August).

As expected the Nifty Hourly chart broke the support of its window 5092 levels and then it went on to test it first support at the expected levels of 5050, now you can also aobserve that Nifty which had a support of 5092 levels is now facing it as a resistance.

Nifty clear downtrend......Sell on every rise

If we can observe,  that Nifty has made a Gap down opening down opening on 5/08/2011 and then again 08/08/2011 , however the same day nifty managed to cover the Gap in Intraday period, on 09/08/2011 Nifty although again opened with Gap down for the third time, but eventually it made a belt hold line and closed making a strong note.......

I expect the market to bounce back on 10/08/2011, however expect the bounce back to be short lived till 11/08/2011 and the Nifty will face a resistance at 5250-5300 levels, which is the gap that Nifty created on 5/08/2011...Important point to note is the Gap will now act as a resistance for Nifty and one should use every rise to 5200 levels to cover their position and new shorts can be built at 5225 levels...

If you look at the Weekly chart of Nifty, after a period of three years, 14 week EMA have convincingly crossed the 34 week EMA and 54 week EMA, it earlier managed to cross the 34 week moving average from above but still it was not a proper signal since it had not crossed the 54 week EMA.

 

You can clearly see the magnitude of downfall in Nifty once these averages were breached..... the Nifty will continue to be in the Negative territory for the next few months now and its first support will be at 4800 levels. any pullback from here should NOT be seen as a BUYING opportunity but opportunity to SELL.