Nifty Daily Chart (1)
Intra Day Trend
The short term trend is down but seems to have found support at 4207 for the time being. A pullback was attempted in the last hour of trading, after positive divergences appeared on half hourly charts. It was stalled after hitting resistance at the 23.6% retracement level of fall from 4693 to 4207. Positive divergences are intact , so we can expect the rise to continue towards the other fibonacci retracememnt levels , which are marked on the chart.
The Daily trend is in neutral zone. The daily momentum indicators are mixed. RSI 14 slipped below the 50 mark but has moved up again, macd is in a sell but above zero line and the stochastic is in oversold zone .Except for the 5 dema all other moving averages are bullishly aligned. Unless we have more evidence we cannot pronounce this fall as a reversal.
In chart one I have marked the consolidation after each rise . The percentage fall has been increasing and this time it has already corrected 81%.
Last week we had the ominous long legged doji warning us that the trend may see a change. Nifty confirmed this with a huge black candle engulfing the doji's real body . This candle completes the evening star pattern which is a bearish reversal pattern. This conveys that the bearishness may continue .The oscillators have turned down.The RSI14 has given a sell and gone below the 70 level. The stochastic and macd are yet to give a sell but has waned a bit.
However the Golden cross of 20,50 & 200wema is intact indicating that this fall may just be a correction. The trendline joining bottoms from 2539 has not been violated yet on these charts.We will have to be watchful of the quality of pullbacks to ascertain future movements --- whether it is with good volumes, good breadth, increase in open interest , follow up buying.
The intra day momentum indicators are moving up from oversold zone, daily momentum is mixed and weekly momentum is moving down from overbought zone. This non alignment of momentum in different time zones is a difficult time to trade. We also have June contracts closing on Thursday.The news flow from budget expectations -- mere rumours till the budget is really tabled-- will rule the movements. Trade very cautiously.
Being cautiously optimistic, I would wait for signals to go long. Stop loss should be strictly 4092 levels. Book Profits at regular intervals too.
Happy Trading !!