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Wednesday, March 25, 2009

Reigning The Nifty --26th March, 2009.

Nifty 30 Minute Chart

Nifty Daily Chart

Today was an "Inside Day" meaning trade was within yesterday's trading range. This keeps the possibility of a reversal alive, as the high of the shooting star formed yesterday, has not been scaled. However, signs of bearishness which was so dominant since January 2009 are hard to find. The next month futures was trading at a 10 to 15 point premium for a good part of the day ! The 84 day SMA which i have been using as a long term indicator has been bullishly crossed once again , but this time the cross seems to be stronger and decisive. The stochastic is still in the overbought zone but has not given a sell. RSI(14) has not yet reached the overbought zone signaling more upsides are possible. The RSI has crossed the highs made in May 2008, which it was not able to cross since May 2008. Macd is strong above the zero line.

The half hourly chart shows breakout from a pennant, which is a consolidation pattern, signaling that the highs of the shooting star may be scaled. Moreover the resistance of 2970 has been overcome on a closing basis , clearing the path for the next target of 3147 which is the January 2009 top, of course provided the shooting star top of 3017 is crossed. RSI(6) -- which gives a good overbought / oversold indication in the very short term -- has started showing strength after reaching the oversold zone today morning.

So the possibilities of an upward move are quite strong. Resistances are at 3017-2040-3138-3147. the 38.2% retracement of fall from 4650 is at 3168.

Supports are at 2923-2914 lows of today and yesterday. Fibonacci supports to the rise from 2539 are at 2905-2835-2780-2724. The level of 2771 where the nifty took support last week coincides with the 50 % retracement level at 2780 . So expect the 2771-2780 levels to be good support. However if this level breaks we may see 2540 levels.

Look for direction on break of 3017 and 2914 , the high and low of the shooting star formed on 24th March,2009.

Happy Trading !!

Lakshmi Ramachandran


Sunil said...

I found very interesting comparison between the last bear mkt (2000-2003) and this one.
1. Mkt corrected 60% of the top.
2. Nifty did not test the bottom again.
3. During the bear mkt all negative moves were retraced by 25% except the final bottom, where retracement was of 50%.
4. After the final bottom ( it was 850 in '00 and for me it is 2250 this time) 920-950 zone was tested thrice ( we have tested 2500-2550 zone twice).After the second test, the rally was fast and furious as we are witnessing now.
5. But for the whole 18 months of consolidation phase, nifty did not cross the 50% retracement from 850 bottom. Once crossed, it never looked back. Similarly, we should not cross 3250 till the bear mkt is over.
The only major difference for me is the time factor. I am reading it as compression of time due to more awareness and accessibilty of data with investors.

Please correct me if I am wrong.



Lakshmi Ramachandran said...

wow ! that is good analysis. will look into it after trading.

Sunil said...

Thanks. Anxiously awaiting your cooments and expansion of my reading of the mkt.
Because, i am net short in the mkt now once 3000 was conquered as my tgt is maximum 3150-3170, wishing to add more shorts there. (I hv been positional long n short since oct and have traded both ways beautifully till now)

Lakshmi Ramachandran said...

I am psoting my reply on the discussion forum at

would welcome a discussion there