Reigning The Nifty - 26th August, 2009

Half Hourly Chart

Daily Chart

I expected the overbought condition on half hourly charts to lead to a correction. The Nifty corrected as expected and the underlying bullishness brought buying at the 23.6% retracement levels of rise from 4353 to 4656 levels making "The buy on dips " strategy profitable.

The Nifty has been successful in closing above the neckline at 4650 of the bullish head and shoulders pattern. It is however prudent to wait for the Nifty to close above the high of 4731 and breakout above 4750 where the rising wedge upper trendline shown in blue offers resistance, before getting too bullish.

The daily oscillators are improving with the Macd giving a buy . The stochastics has reached the overbought region. But the oscillators on half hourly charts are showing negative divergence which may lead to a test of the lows made today. The move from 4653 has been steep and this calls for a mild cautionary stance. The appearance of a small bodied candle after three bullish candles supports this caution.

This does not call for shorting but hedging your longs and shifting stop losses to 4582 on positional longs would help protect profits.Buying on dips so long as the low of 4353 is held , is the startegy as of now.



Happy Trading !!

Lakshmi Ramachandran
www.vipreetsafetrading.com