Reigning The Nifty --Week Ended 17th April,2009

Nifty Weekly Chart

Nifty Daily Chart


Half Hourly Chart Showing Targets

Once again we have a white candle on the Weekly Charts but with a difference. This candle signals selling at higher levels. It is a shooting star. The Daily charts too have formed a shooting star on 17th. This candle adds weight to the bearish engulfing pattern formed on 16th.

A shooting star is ominous when formed during an uptrend (minor or major). At this point, it appears as though the longs are in complete control. On the day of the shooting star, the rally continues in full force but soon , however, profit taking ensues. The stock closes near the open, forming a small real body. A shooting star therefore has a small real body and a large upper shadow. Typically, there will be either no lower shadow or a very small one. The candle warns of the end of an uptrend. The characteristics are,

• Small real body formed near the bottom of the price range
• The upper shadow at least three times as long as the body.
• The lower shadow is small or nonexistent.

A lot of indications are biased towards the bearish side.

• Both, the weekly and daily candle conform to the characteristics and we may have a reversal /correction on hand .
  
• The fact that I have been talking about the uptrend mature for a correction time wise (refer last week's analysis) , is reinforced by the appearance of the shooting star.
  
• The 200 dema is a huge resistance and the Nifty has not been able to convincingly scale it.
  
• The weekly stochastics is turning down from overbought levels (These levels have been reached last on January 2008).
  
• On half hourly charts the rising wedge which is a bearish pattern in an uptrend, has broken down .
  
• The Nifty has not been able to close above 3450, the 50% retracement level of fall from 4650.
  
• The weekly close has not been able to scale above the channel marked in red on the weekly chart.

Bullish indications are

• downtrendlines from January 2008 top and from 30th April 2008 top have been scaled successfully.

To sum up,

The weekly charts have support at 3308 from the Down trendlines. Resistance from the red channel is at 3405.

The action on 17th formed an inside day--explained in my earlier posts. So trade on a break of low or high made on the 16th. Trade long if breaks aboved 3511 the high of 16th , and trade short if breaks 3354 the low of 16th. Trade with appropriate stops as bearishness has to be proved by breaking the uptrendline from 2539 and bullishness will prevail only on scaling 3511.

Important Supports and Resistances shown marked on the charts.


Happy Trading !!

Lakshmi Ramachandran
www.vipreetsafetrading.com