Reigning The Nifty - 12th June , 2009

Nifty Daily Chart

Nifty Half Hourly Chart

Another Inside Day ! A Bearish Harami ! Occured at good resistance on a rising wedge too.With negative divergence on the daily RSI and Macd Histogram. The rate of rise of the 50dema has been waning. The weekly oscillators are extremely overbought.The Rising wedge was too difficult to cross once again. Enough evidence to be extremely cautious.

This candle pattern can be very useful for spotting changes in the direction of a trend. An inside day is often used to signal indecision because neither the bulls nor the bears are able to send the price beyond the range of the previous day. An inside day/ bearish harami found near the end of a prolonged uptrend may suggest that the rally is getting exhausted and is likely to reverse. The smaller the second day's body the more likely the probability of a reversal.If the close is towards the high of the previous day, the fall could be staggered and slow and if the close is towards the low of the previous day the fall could be stronger.

Maybe the elusive fall is finally close. As suggested above the fall may not be too strong . The fact that money is waiting on the sidelines may prop up the Nifty at every fall strengthens this view.

Trading above 4688 , the high of the inside day pattern will take the Nifty to higher targets. While trading below the low at 4551 will take the Nifty down.

Resistance for the day is at 4678 and Support is at 4548 - 4454. Weekly support is at 4417.

I would suggest booking out of longs on open and wait for the signals to short. Let's see if we are proved right or in for a surprise once again!

Read more about bearish harami in my post
http://vipreetinvestments.blogspot.com/2009/05/reigning-nifty-14th-may-2009.html

Happy Trading !!

Lakshmi Ramachandran
www.vipreetsafetrading.com