Nifty for 03 Aug 07

These are my personal musings. These are not in any way meant to be trading advise. To view the full chart, right click and open in a new window.

The Nifty did hit a rising line as was hoped for by bulls. So far support does seem to have come in.

It remains to be seen whether or not, this support will hold. The probability of it holding now seems high. I would use the high of 4429 as a benchmark to decide whether or not, the Nifty has enough strength to breakout upwards. Volumes are tepid at best, and the decider would be more buying interest in the shape of rising volumes. Trading does become difficult when the Index opens with an upside or downside gap, and can just rush through stop levels. This is one hazard which a trader needs to accept while trading. An investor may take things a little easier.

In such a scenario, a trader can hedge his positions by using options, which is a protective strategy.

As far as the longer term perspective is concerned, I can only repeat my suggestion of many days … technically the position remains as a suggestion to buy on dips. Now, the last bottom of 4327 becomes significant, so stops may be placed at 4325.

Plan your trades and trade happy.