Nifty Index updated on 10 August 06

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.
As was suggested yesterday, the upward momentum has slowed down for the Index. The short term trend is still up. We did see a crack in the short term trend, but the Index was quick to recover.
The momentum having slowed, the possibility still remains that we could see a downward correction. The correction may not be too deep, as we see strong volumes coming into the Nifty Future, on every dip.
In terms of analysis, today was a “nothing” day, where the price has done nothing much. And it is “nothing” days like today, which place doubts in traders’ minds. In candlestick terms, it is like a spinning top on the end of day chart. This leads to corrections. In conclusion, wait for corrections, and take full advantage of dips.

Nifty Index updated on 09 August 06

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 chart clearly shows the upside breakout of the short term downtrend. As has been suggested all along, we could have been buying on dips. Today, the Nifty has achieved its short term objective of 3250+. Also the Sensex has almost achieved the Fibonacci retracement level of 11195. No doubt both the indices have reached their price objectives. It also leads me to believe that there could be a temporary halt here.
Further, normally, whenever there is an upside breakout, the prices tend to slip down on profit booking. This profit booking allows the price to test the breakout levels. If the breakout levels hold, then we could expect the longer term trend to continue up. Therefore, we may see some sort of downside correction from here.
But again, we have to step back a little and observe the woods, and not the trees.
The intermediate trend is still positive, and a downside correction, if any, would only be in the nature of the bears testing the waters.
As has always been maintained since the last six weeks, the patient traders can make money provided they time the market in their buying.
In conclusion, wait for buying opportunities, rather than rush in.

Nifty Index updated on 09 August 06

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 chart clearly shows the upside breakout of the short term downtrend. As has been suggested all along, we could have been buying on dips. Today, the Nifty has achieved its short term objective of 3250+. Also the Sensex has almost achieved the Fibonacci retracement level of 11195. No doubt both the indices have reached their price objectives. It also leads me to believe that there could be a temporary halt here.
Further, normally, whenever there is an upside breakout, the prices tend to slip down on profit booking. This profit booking allows the price to test the breakout levels. If the breakout levels hold, then we could expect the longer term trend to continue up. Therefore, we may see some sort of downside correction from here.
But again, we have to step back a little and observe the woods, and not the trees.
The intermediate trend is still positive, and a downside correction, if any, would only be in the nature of the bears testing the waters.
As has always been maintained since the last six weeks, the patient traders can make money provided they time the market in their buying.
In conclusion, wait for buying opportunities, rather than rush in.

Nifty Index updated on 08 August 06

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 market recovered quite sharply from the lows of yesterday. Even though we had a good up move, the extreme short term trend is still down. Since the intermediate trend is up, it was suggested in my earlier posts, to use the short term dips to buy. Please check my post of Friday …. Click here.
The Nifty is back in the zone of uncertainty, but this time around, it does seem to have gathered enough momentum to break out upwards. The markets are just waiting for a cue from the FOMC meet, and then take any decisive move.
Let us wait and watch.

Nifty Index updated on 07 August 06

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.
As suggested on Friday, there was follow up weakness today, and the Nifty has indeed gone into a short term downtrend. Actually, no one is willing to take a directional call on the market, with the FOMC meeting coming up ahead. For those who are not aware, the FOMC meet is where the Govt. of USA decides whether or not to raise interest rates.
The boogie of interest rates has always loomed large on the markets, with most major Governments raising interest rates, thereby making borrowing of capital more expensive.
The charts too are reflecting the uncertainty in players’ minds. I have highlighted the sideways movement of the Nifty, where it played out for most of the day. Therefore, the price action on Thursday and Friday will have a most crucial bearing on the future of the Indian markets.
With the price action of the past, we could expect support marked out at the 3050 to 3060 level.
Now is the time, when patience will pay rich dividends.

Nifty Index updated on 04 August 06

Disclaimer: These are my personal musings and only meant for entertainment, not as trading advise. To view the full chart, right click on the thumbnail and open in a new window.

The extremely short term chart is showing weakness after a long time. A lower top and lower bottom is showing up on the chart after 24 July 06. I have marked it out in red. We should therefore, sit up and take notice. The previous bottom (marked in green) was around the 3110 levels.

A break below 3162 could take the Nifty down to 3075, 3062 or 3051 levels. This could be the opportunity which longer term bulls are waiting for.

The higher the Nifty stops between the 3075 to 3051 levels, the stronger it will rebound upwards. It all will depend on how much time it takes to correct.

Extreme short term traders could look out for shorting opportunities on rises. The patient among us, with a slightly longer term horizon, could start committing small quantities of capital on dips to go long.

Nifty Index updated on 03 August 06

Disclaimer: These are my personal musings and only meant for entertainment, not as trading advise. To view the full chart, right click on the thumbnail and open in a new window.

We have seen a breakout of the Great Wall of resistance today. Is it a false breakout? Only time can tell as of today. The earlier resistances should act as support points, as the Nifty has still not made a lower top and lower bottom pattern as of now.

The crash of the last 90 minutes or so can be attributed to a knee jerk reaction to the Bank of England raising interest rates out of the blue. Or … the event may have been used as an excuse to run stops of bulls … who knows for sure?

The Nifty could resume its uptrend tomorrow when the news is assimilated and discounted. All said, I have been mentioning for the last week or so, to keep hedging, to avoid untoward capital losses.

Even now, the probability seems higher that the bulls will get back in action. And as they say, when the intermediate trend is up, use short term downside corrections to go long. I am still of the opinion that we could use dips to buy, until we see a technical breakdown.

Nifty Index updated on 02 August 06

Disclaimer: These are my personal musings and only meant for entertainment, not as trading advise. To view the full chart, right click on the thumbnail and open in a new window.

The Nifty is back in the “Zone”.

From the manner in which the Nifty is moving, we surmise that during the beginning of last month, there was cautious optimism. Later, there was a shakeout of the weaker bulls, who were leveraged to the full.

Once they were out of the system, we see that there has been a sharp bounce back up. This move may not have allowed the bulls to re-enter, due to the swiftness of the move. It does seem from the last three days, that accumulation is happening. The bulls are not allowing the price to fall beyond a reasonable level, which could make recovery impossible. Further, the sidelined bulls still seem to be waiting for a substantial correction, to enter long. These bulls, who have missed the bus, will start chasing the price, which could further fuel the bullishness. And as is common, they will be left holding the baby at higher levels.

At present there are no panic buttons being pressed, either by the bulls or the bears.

Both the camps are adopting a wait and watch attitude.

The dice still seems weighted in favour of the bulls at this point in time.

Nifty Index updated on 01 August 06

Disclaimer: These are my personal musings and only meant for entertainment, not as trading advise. To view the full chart, right click on the thumbnail and open in a new window.

Not much to add from yesterday’s post.

The Nifty continues in a trading range, as suggested yesterday. We have had three retests of the 3110 levels within two trading sessions. That alone, enhances the significance of the level. The supply zone has still not been penetrated. The safety of the supply zone is now keeping the bears in a comfort zone. It would disturb the bears only when the 3200 levels are swept aside convincingly.

We could, therefore, expect action only when this Great Wall is cleared to the upside.

Nifty Index updated on 31 July 06

Disclaimer: These are my personal musings and only meant for entertainment, not as trading advise. To view the full chart, right click here and open in a new window.

On strong global cues, the Nifty opened with a gap. It kept hammering away at the upside Resistance Zone, almost throughout the day. Just goes to show how strong that resistance zone has become. On a low volumes day, coupled with some disappointing results from a couple of Index heavyweights, it tanked towards the end.

It really was a flattish kind of day. The Index has managed to keep above the previous swing low, which I have marked out in red. I have also marked out the rising swing tops in blue. This is a very short term observation.

With the mood being suddenly bearish in the last hour or so, we may see some extension selling tomorrow. Maybe the previous swing bottom could also be tested.

Now, stepping back a little, we will observe that the intermediate term trend is still up. The Nifty has not as yet violated any of those levels, which I depend on, using my personal indicators. And when the intermediate trend is up, and the short term trend inclines down, our reaction should be to buy on dips. In any case, the fact is that the Nifty has turned rather flat. And when the volatility narrows down, we normally tend to get a sharp move. It could be that we have a sharp move down! Bulls could use this opportunity to enter the market.

In case the Nifty does violate the low 3110 of a few days ago, the pattern could turn out to be an expanding triangle. An expanding triangle is one where the price makes two or three lower lows and higher highs. That is considered to be a bullish consolidation pattern. And usually, the price breaks out to the upside.

As I have been oft repeating, stops and/or hedging are a must when indices open gap up or down.

Finally, trade happy.

Nifty Index updated on 28 July 06

Disclaimer: These are my personal musings and only meant for entertainment, not as trading advise. To view the full chart, right click on the thumbnail and open in a new window.

The Nifty traded sideways with a negative bias. Is it not to be expected, with a huge 200 points rise in just four trading sessions?

The roadblock ahead still holds.

Looking at the weekly chart, we see a side-by-side bearish and bullish candle. Normally this is considered to be an extremely bullish pattern. Further, I looked at the Heikin Ashi method of plotting the weekly Nifty, and the candle is a small bodied candle, with large shadows, which normally signals a change in trend.

On a weekly chart, the trend was down, and possibly, the trend may change to up. We also see a pick up in the total traded volumes on both the exchanges. This leads me to assume that, barring unforeseen circumstances, the trend is going to continue upwards.

Maybe this time, the Nifty will break out from the trading range roadblock?

Nifty Analysis for 27 July 06

Disclaimer: These are my personal musings and only meant for entertainment, not as trading advise. To view the full chart, right click on the thumbnail and open in a new window.

As was expected, the bullish run continued.

There was a minor hiccup during the day, but not enough to unnerve traders. The real test would now begin, where the Index will retest its earlier resistance zone.

And as is said in Technical Analysis, “till evidence to the contrary, the previous trend is assumed to continue”. Since the previous short term trend is bullish, we could continue to keep approaching the market with the same stance.

We also notice that earlier, the bears have been quite successful at the 3200 zone. Will they be beaten this time? It seems unlikely that they are going to give up easily.

However, if we step back and notice the forest rather than the trees, the weekly chart suggests a large bullish candle, for this week ending today. Therefore, we could assume that this time around the bears could be overwhelmed by the bulls.

Nifty Index updated on 26 July 06

Disclaimer: These are my personal musings and only meant for entertainment, not as trading advise. To view the full chart, right click on the thumbnail and open in a new window.

The Nifty finally held its head above the crucial bottleneck which was holding it back. There is not much to add to yesterday’s analysis. On the intraday charts, the Nifty is looking overbought, which could lead to some correction. But again, as mentioned yesterday, we are now on a “buy on dips” scenario.

Also a notable thing on the Nifty futures chart is that 25 July was a rising window day. That rising window is still open, which adds further weight to the bullish scenario.

Today, the bears did have to run for cover. Then the active bulls managed to keep the index above the reach of those would-be bulls who were waiting on the sidelines. These fence sitter traders were hoping for a downside dip, which could allow them a “safer” long entry. However, as we know, the market does not have a habit of obliging. Towards mid-session, we saw these disappointed bulls chasing stocks. That added more bullish fuel.

It is normally observed, that when bulls start chasing stocks, the market has a habit of shaking them out. Also, the trend is unable to sustain itself for long. Further, we notice that in the last two months, we have not had a prolonged trend. The Nifty has trended up for a maximum of seven days in a row.

The 3188 level on the Nifty is now going to be a level to watch out for. Also 3038, 3047 and 2996 levels are technically crucial.

Going ahead, for the short term, we could see a correction till the 3070 levels, and a probable projected price target of 3143.

Please plan your trades accordingly.

Nifty Index updated on 25 July 06

Disclaimer: These are my personal musings and only meant for entertainment, not as trading advise. To view the full chart, click here.
As we have seen, time and again, the Nifty has again gone and tested the 3050 level once again, putting us squarely within that trading range.
The positive aspect is that the low of Monday is on the earlier congestion zone. Secondly it has just taken support on a Fibonacci retracement level of 48.6% of the entire rise from 2595 to 3208.
No doubt, the Nifty has made a higher top, above its immediately previous resistance level, but please remember, it has also made a lower bottom. To view the chart, click here.
This is not an ideally bullish scenario. An ideally bullish scenario would be that the Nifty corrects from here, makes a bottom above 2880, and then violates the high of today, which would be 3047 levels.
The broad market is indicating some more bullishness to come, but remember, the broad market cannot distinguish between a bear market rally and a genuine bull move.
As stated yesterday, selling into this rally indeed has been profitable. However, since the Nifty has made a higher top, we could be prepared to buy the dips now.
Obviously, it goes without saying that adequate stops should be adhered to, without which a person should not even dream of trading, let alone investing.

Nifty Index updated on 24 July 06

Disclaimer: These are my personal musings and only meant for entertainment, not as trading advise. To view the full chart, right click on the thumbnail and open in a new window.
As suggested on Friday, the Nifty opened below the low of Friday, and straightaway tanked to around 2880. For a memory refresh, click here.
For the last few days, the Nifty is playing in two major congestion zones of 2870 and 3040. For ease of identification, I have marked them out on the chart. I also follow the minor trend for the Nifty, and we can see that the index has tested both, the lower as well as the upper ends of the down channel.
For the whole of last week, we have seen the Index trending down. It is also apparent in the supports and resistances chart alongside. Possibly, the minor trend has turned for the positive, as of now. A rough thumb rule to devise for it should be; that the Nifty must not trade below today’s low around 2880, and should continue to make higher tops, above the 3000 levels.
Looking at the negative sentiment prevailing in the market, it could just continue positive till the end of this week. In any case, we are just three trading sessions from the expiration of this derivatives settlement. Therefore, it is a foregone conclusion that volatility will rise even more.
Till we see evidence of a higher top and a bottom being established, selling on rises could be a “better” trading strategy.
In any case, those among us who have bought at higher levels could get an opportunity to exit.

Nifty Index updated on 21 July 06

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

Contrary to expectation, the bears were indeed able to flex their muscles today. They also managed to close the rising window of yesterday. The bulls, however, managed to restrain the bears by keeping the Index above yesterday’s low of 2920. The Index went into a narrow congestion zone of 20 points in the last three trading hours.

The roadblock overhead still holds.

Now, let us take a look at the second chart. I have marked out the various peaks and troughs. I have marked out how the peaks and troughs were behaving in the last fortnight or so. After making a couple of higher troughs and peaks, the Index has continuously been making lower peaks and troughs.

Today’s low has been higher than the last trough. Therefore, for a bullish move to resume, today’s low of 2930 must be respected. Failing which, we can assume that yesterday’s sharp upward move was yet another bear market rally.

That means we could even see a projection level of 2880 to 2851.

The positive divergence confirmed at the 2920 level suggests that today’s bottom could hold, and we could see a bullish uptrend resuming from Monday.

It does seem a tricky situation to trade in, but then, trading in such volatile markets is never easy.

Trade happy.

Nifty Index updated on 20 July 06

These are not in any way meant to be trading advise.
Yesterday, in my analysis, I had mentioned that the Nifty Future was showing a positive divergence, which could allow it to be a significant short term bottom. And that is how it seems to have turned out to be.
Is the Nifty still out of the woods? Much depends on how it turns out tomorrow. We have seen that there was selling pressure at higher levels. We have also seen that today, the volumes were lower than yesterday. Which puts a question mark on this rise. The Nifty opened with a bang, and went straight and hit yesterday's roadblock. As mentioned yesterday, these levels had been providing supports earlier, and now are turning formidable resistances.
The lower volumes suggest that the bears have not covered as yet. It also suggests that the bulls have not positioned themselves either.
On the hourly chart, there is a rising window, which the bears may try and close tomorrow. On the other hand, the bulls would not like bears to exit their existing short positions carried over from yesterday. Therefore, it all boils down to who has more muscle.
The probability suggests that, this time, the bulls could be at a temporary advantage. Which could lead to some more strength in the Index. But with so many resistances overhead, how long will the strength last, is anybody's guess.
Short term traders could trade long, but with strict and tight stops.

Nifty Index updated on 19 July 06

These are my personal musings. These are not in any way meant to be trading advise. To view the full chart, right click on the thumbnail on the right, and open in a new window.
The Nifty opened with a bang, and went straight and hit a concrete roadblock. These levels had been providing supports earlier, and now are turning formidable resistances.
It does not require a genius to pass a commentary on this chart, where we see a straight downhill ride all the way. Without a speed breaker on the way. Today, I have also included another blue line which is parallel to the red resistance line overhead. Even that has been violated. As a result, the sentiment is getting from worse to worst.
On the hourly charts, the futures are now showing some positive divergence, on reliable volume based indicators, which could allow this to be a significant bottom, while looking at the extreme short term trend.
There is a zone of support just 20 points below, which could provide temporary support to the Index. However, any retracements are now going to be met with renewed selling. Which is going to depress the sentiment further.
As has been suggested several times earlier, trade with the trend, and in volatile times like this, use hedging techniques to avoid calamitous movements of the market against your trade.

Back on track

We seem back on track, keep watching this space for more thrills and chills.
And ... as always ... trade happy.

Nifty Index updated on 17 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.
How the technical position changes within a span of two trading days. The Nifty opened with a downside gap, and continued down. We have readjusted the blue up sloping trendline to accommodate the minor incursions of the rising trend. This trendline, which has been providing strong support all along this rise, has been broken decisively today. A “loose” head and shoulder pattern has also taken effect on the hourly chart. The shoulders are marked “S” and the head “H”.
Now that the short term trend is down, any rises will be accompanied by heavy selling. Which will in turn depress the sentiment even more.
Unfortunately, for the index, it will now take huge buying to reverse its trend.
Now let us look at the positive side. Normally, we see that a sharp rise or drop like this is followed by profit booking covering, which allows the minor trend to reverse. In this case, we could see short covering. Further, the loose H&S pattern has almost completed its 100 point amplitude target.
We could therefore, see a minor upward reversal, which could allow the Nifty to test 3040 to 3065. From there, we could see further selling pressure which could push it down to approximately the 2930 levels. We could possibly see the index heavyweights bottoming around those levels, which could allow the Nifty to begin a fresh up move.
A couple of days back I had uploaded a projections chart. Here is the link in case the reader wants to refresh his/her memory - Right click here and open in a new window. The reader would notice that the projections were drawn up with the 3057 level as a base and 3147 as the minor pivot. Both these levels have been violated. Therefore, the earlier projections based on this chart, have been negated, and are discarded.
As of now, sell on rises could be the prudent thing to do.