Nifty Index updated on 12 July 06

Disclaimer: These are my personal thoughts and not trading advise. To view the full chart, right click on the thumbnail and open in a new window.

It does seem that the charts have followed the markets pretty well. The opening 30 minutes were hugely volatile as can be expected, with the shadow of yesterday’s terrorist events. The rising blue trendline was tested, where nervous bulls were shaken out.

The results of the bellwether, Infosys, ultimately pulled the day in favour of the bulls.

The short term (red) down sloping trendline was also retested on the hourly charts twice. Ultimately, the bulls prevailed.

Maybe these are a bit of philosophical ramblings, but as the heading says, these are my personal musings, so I will go ahead and take the liberty of talking a bit out of context of technical analysis.

During the entire day, I was getting euphoric messages that the Indian Stock markets have given a befitting reply to the terrorist attacks. However, before getting patriotically euphoric, let us look at the chart once more. It is telling us that the Nifty has come back into the same zone, where we have witnessed large scale profit booking earlier.

Therefore, it could be prudent to assume that we are going to see the same roadblock in the advance of the Index. However, as usually happens, generally euphoria makes the targets to be overshot. Therefore, it is my assumption, that the Index could face its first resistance, a few points above 3200. Then there could be a correction, which could allow the Nifty to then correct to the 3140 levels.

Bulls who are waiting on the sidelines could use this opportunity to enter long for the short term.

And as is usual, in such volatile markets, stops should be adhered to, to avoid calamities.

Summing up, it may be said that the longs have a better chance to be profitable.