Reigning The Nifty - 5th October, 2009

So , the weekly, quarterly and monthly closings are bullish. Every market related blog and newsletter is anticipating a downmove. Maybe that is the reason why the downmove is so elusive. Volumes have been waning in the last three months and the advance decline line too is not keeping up with the Nifty. Negative divergences on oscillators have been ringing alarm bells since some time now.So are the bears coming out of hiding or are the bulls too strong for that to happen ?

Weekly Nifty Chart I

Weekly Nifty Chart II

Momentum

Weekly Oscillators have started moving up again in the overbought region though a higher high has yet to be made to remain in line with the Nifty.


Moving Averages

Moving averages are bullishly aligned.


Sentiment Indicators

Market breadth was marginally negative for the week inspite of the rise in Nifty.

Volumes were very low due to the truncated week.

Put call ratio which was at 1.26 last week increased to 1.38 this week.


Bullish Price Pattern

Inverse head and shoulders breakout has been maintained for the fourth week.Therefore, the neckline , shown in pink in Chart 1 , becomes strong support. The level for this week is at 4703 .


Bearish Price Pattern

Rising Wedge forming since 26th June 2009 shown in Chart 2 in red dash line. This will be invalidated if Nifty breaks out above the uppertrendline which offers resistance for the week at 5270. Support at the lower trendline is at 4980

Daily Chart

Daily charts show a Doji after making new highs.Moving averages are bullishly aligned.The red dotted upward moving channel is intact with support at 5029 and resistance at 5199. Oscillators are exuding strength after wavering in the overbought region. Negative divergences are intact.

Half Hourly Chart

The staircase is getting narrower.

My View

The Weekly charts are still showing a strong uptrend with moving averages bullishly aligned and maintaining a higher top higher bottom scenario.Strong support is at 4830, being the lower trendline support of upward channel shown on weekly chart 2.The uptrend is intact till the break of this trendline.

Daily charts too look strong. A break below 5029 is required to initiate weakness.

On half hourly charts a break below 5057 can take it down to 4904. Weakness will accelerate below this level.

Lower volumes, negative divergences, and overbought oscillators , call for some caution.

Trade light and with protection.


Happy Trading !!

Lakshmi Ramachandran
www.vipreetsafetrading.com