Reigning The Nifty - 5th April, 2010

Quarterly Chart

• Rise of  just 150 points since the September 2009 quarter.Doji in the last two quarters with long lower shadows showing support at lower levels.
• Stochastics has reached the overbought zone crossing its peaks made in 2003,2006 and 2007.
• Volumes have been falling since last three quarters.
• Rising wedge having support at 5015 and resistance at 6503.

Monthly Chart

• Big bullish candle breaking out above the down trendline from Jan 2008 highs.
• Volumes falling continuously.
• Up trendling channel intact having support at 4812 and resistance at 5404.
• Oscillators moving down from the overbought zone after showing negative divergence.
• Last month I mentioned, "A  broad range of 780 points between 5310-4538 maintained since last six months. Only a break out of these levels can trigger bullishness or bearishness. Else range bound movements will continue". The range broke briefly but ended the month back into it.

Weekly Chart

• Doji on low volumes.
• Rsi 14 and  roc 12 continue to be in negative divergence. Stochastics has given a sell in the extreme overbought region.
• Rise from 4675 shows a rising wedge giving support at 5305 and resistance at 5428.
• Rising channel shown since several weeks has resistance at 5447 and support at 4800.

Daily Chart

Half Hourly Chart

Advance Decline

Yesterday I observed,

Half hourly stochastic oscillator has reached oversold zone. Rsi 14  has reached levels where it has taken support at levels maintained since 15th March. Nifty has bounced back twice  from these levels . Will it do so a thrid time? The fall has formed a falling wedge which is a bullish formation. Watch for support on the lower trendline of the wedge as this may lead to a breakout from the wedge.

Nifty managed to claw back 40 points as anticipated on very good breadth, but, on low volumes.
Half hourly charts have given a breakout from the falling wedge and the falling channel too which appeared after redrawing the upper trendline. Oscillators too have started showing strength once again.A test of the recent top of  5330 is possible due to improving technicals in the very short term. Breadth improved considerably on the last trading day.Crossing 5330 could lead to further upside, levels marked on charts.

Daily , weekly and monthly oscillators continue to  show  negative divergence. Quarterly charts show stochastics having reached overbought levels. Volumes are falling on all time frames. Breadth too has been on the decline. All this points to remaining cautious on longs.

Stop loss should be a close below 5187.



Happy Trading !!

Lakshmi Ramachandran
www.vipreetsafetrading.com