Reigning The Nifty - 31st August , 2009

  

Half Hourly Chart

Daily Chart Showing The Patterns

 Weekly Chart

  Daily Chart

Last week I said  " Intraday and Daily momentum indicators and moving averages are improving. Sentiment indicators are biased towards an upmove-- the breadth improved and selling was on low volumes. Put call ratio is showing oversold condition. The Weekly moving averages are strong and momentum will improve with this recovery in the short term. With the support of 4350 being held for the third time and a breakout from the falling wedge and inverted head and shoulders, bias is towards an upmove until this support is broken".  As predicted the upmove gained momentum and closed above the high of 4731.

Today the Nifty took support exactly at our level of 4650  and rallied back immediately. Last week we saw the Nifty break a three day range of 4353-4493 decisively on the upside and wondered whether it would lead to an upside breakout from the broader range of 4731-4353. The Nifty did break out intraday but has closed at 4732-- around the same level of the previous high of 4731 . Does the  Nifty have  enough strength to continue the upmove ?

Momentum

• Weekly oscillators have moved up slightly , the Macd which was getting ready to give a sell last week has given a slight uptick.
  
• Daily oscillators are improving after giving a minor negative divergence.Stochastics has given a sell in the overbought region.Macd gave a buy on 25th after being in sell for almost two weeks.
  
• Intraday oscillators continue to show a negative  divergence.

Moving Averages

 Moving averages on all time frames are bullishly aligned.

 

Sentiment Indicators

• Volumes for the week improved over last weeks volume marginally .
• Put Call ratio today was 1.20 indicating oversold markets.
• Advance declines improved considerabky through the week.
• OBV has broken above the previous high made in this rally  .
  

Bearish Pattern

• The action since May 14 low of 3537 has taken the shape of a rising wedge, which is a bearish pattern. Break down from the wedge could give a 1200 point move. Negating it would require the Nifty to break above the upper trendline of the wedge.

Bullish Pattern

• An inverse head and shoulder pattern is seen forming with neckline at 4750 .Break out from the pattern could give a 2400 point move up.
• Falling wedge pattern shown in red dotted line on half hourly charts with a target of 5129.
  
• A falling wedge formation shown on intraday charts from which the Nifty has broken out today giving a target of 4934.
  

Nifty had  strong surge up when the 4350 levels refused to break,  leading to short covering . After the breakout from the falling wedge , there was nervous selling by weak bulls and a few die hard bears . But the stronger bulls chose to buy on every dip leading to a straight seven day rally. The neckline of the inverse head and shoulders has been scaled. Also the weekly close was above the rally high of 4731 , though by just a point.Momentum indicators on various time charts are not too rosy making me cautious. The  sentiment indicators seem to be improving. The options data seem to indicate strong support at 4400-4500 levels.
Trading above the 4700 mark
Though the neckline has been scaled  it would be prudent to wait for more confirmation. Firstly , the rising wedge needs to be negated. Scaling of it's upper trendline decisively is necessary. The level at which it offers resistance is at 4750.Trading above 4750 can lead to upsides of

• 4788 the 61.85  retracement level  of fall from 6357-2252
• 4894 the target of falling wedge
• 5129 the target of the falling wedge from which Nifty broke out on July 17th, 2009

Else Nifty could test the lower end of the rising wedge which is around 4250.


Supports are at  4711-4650-4582.

I would be cautiously long on the markets keeping my longs hedged.

Happy Trading !!

Lakshmi Ramachandran
www.vipreetsafetrading.com

Reigning The Nifty - 28th August, 2009

Rising Wedge on Daily Chart



Half Hourly Chart

Daily Chart

Nifty was positive today and failed to give in to the weakness of the short term rising wedge shown yesterday. However , the session was on low volumes keeping in line with the charateristic of the rising wedge forming since mid June. I have redrawn the wedge from June highs and July lows as it seems more appropriate. The resistance and support lines remain the same.

Negative divergence on intraday charts persist. Daily stochastics is in overbought region and is starting to turn down.The uppertrendline of the rising wedge is threatening at 4750. If taken out then we have a very bullish market. Else the bearishness of the rising wedge will give a slide of 800 points. Advance decline line is very encouraging.

For tomorrow staying above todays high of 4708 can see the Nifty testing the 4731-4750 levels. Staying below 4708 can take it down to 4650 - 4625. Levels are marked on the charts.


Happy Trading !!

Lakshmi Ramachandran
www.vipreetsafetrading.com

Reigning The Nifty - 27th August , 2009

Sensex Daily Chart

Half Hourly Chart

Daily Chart

Nifty moved in a 37 point range all day , making a higher high and a higher low, keeping the bullishness intact. Shifting the stop loss to 4582 was comforting as there was a good amount of volatility within this range and the forming of a rising wedge on intraday charts threatening a breakdown. The negative divergences on half hourly charts added to the possibility of a correction.

On half hourly charts the rising wedge has been broken giving a downside target of 4566 which coincides with the 38.2% retracement level of rise from 4353 to 4697. Bouncing from this level would be a bullish sign.

Daily charts show an improvement . The negative divergences have disappeared. The Macd is in buy mode. The stochastics has reached overbought region but still strong and in a buy mode. The upper trendline of the falling channel from which Nifty broke out, has strong support at 4625. Resistance comes at 4725 on the upper trendline of the rising wedge.

The candle formed on the Sensex (which is more accurate, as in the Nifty the previous day's closing price is always taken as the opening price for today) is a doji indicating hesitation to continue the ongoing uptrend. The rising wedge is also depicted much more clearly on the sensex. Fall in volumes , which is an important characteristic of the falling wedge is shown on the charts and confirmed by the OBV.

Watch out for the resistance of the upper trendline of the rising wedge at 4725.

Happy Trading !!

Lakshmi Ramachandran
www.vipreetsafetrading.com

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

Reigning The Nifty - 25th August, 2009

Daily Chart




Half Hourly Chart

The inverse head and shoulders target of 4632 was achieved very easily in the morning session. With this the Nifty has closed above it's resistance at 4619 and closed above it. There was strength throughout the day with hardly any correction except some profit booking towards the end which was insignificant. Volumes though on the lower side, was better than the last two trading sessions. Advance decline was very encouraging to the bulls. The sensex has closed above the neckline of the inverted head and shoulders formation, which was proving resistance at 15580. The Nifty however has yet to cross the neckline around 4652. However the more important and strong resistance would be at 4731, the high of this rally which started in March 2009. Once this is overcome we could use the neckline to arrive at the target. Meanwhile the target at hand is that of the falling wedge breakout shown on half hourly charts of 4882.

The Daily oscillators are moving up once again. Moving Averages on all time frames are now bullishly aligned. The half hourly oscillators are overbought and this may lead to some correction.

I would remain long and buy on dips with a stop loss 4500.

Happy Trading !!

Lakshmi Ramachandran
www.vipreetsafetrading.com

Reigning The Nifty - 24th August , 2009

Half Hourly Chart

Daily Line Chart

Daily Chart

Weekly Chart

Today saw the Nifty break the previous three day range of 4353-4493 decisively on the upside raising hopes of an upside breakout from the broader range of 4731-4353. Is the Nifty poised to continue this upmove? Let's do a Health check of the Nifty

Momentum

• Weekly oscillators have weakened further, the Macd getting ready to give a sell.
• Daily oscillators are showing signs of improving after giving a minor positive divergence.
• Intraday oscillators are showing strength after showing positive divergence.

Moving Averages

• Weekly moving averages continue to be bullishly aligned.
• Daily moving averages are bullishly aligned excepting the 5 dema which is turning up to move above the 10 & 20 dema.
• Intraday moving averages 5,10,20,50 are bullishly aligned but all of them are below the 200 period moving average.

Sentiment Indicators

• Volumes for the week were very low .
• Put Call ratio today was 1.10 indicating oversold markets.
• Advance declines improved through the week.
• OBV has moved up after taking support at lows made when Nifty made a low at 3918 in July 2009.
  

Bearish Pattern

• The action since May 14 low of 3537 has taken the shape of a rising wedge, which is a bearish pattern. Break down from the wedge could give a 1200 point move. Negating it would require the Nifty to break above the upper trendline of the wedge.
• Head & Shoulders pattern on half hourly charts. Break of neckline at 4350 will give a down move of 300 points.

Bullish Pattern

• An inverse head and shoulder pattern is seen forming with neckline at 4700 .Break out from the pattern could give a 2400 point move up.
• A falling wedge formation on intraday charts from which the Nifty has broken out today giving a move of 350 points.

Intraday and Daily momentum indicators and moving averages are improving. Sentiment indicators are biased towards an upmove-- the breadth improved and selling was on low volumes. Put call ratio is showing oversold condition. The Weekly moving averages are strong and momentum will improve with this recovery in the short term. With the support of 4350 being held for the third time and a breakout from the falling wedge and inverted head and shoulders, bias is towards an upmove until this support is broken.


Happy Trading !!

Lakshmi Ramachandran
www.vipreetsafetrading.com

Reigning The Nifty - 21st August, 2009

Half Hourly Chart

Daily Chart Showing falling Wedge

Daily Chart

Today's candle though bullish, was on extremely low volumes. Nifty ended within the tighter range of 4350-4500 since last three trading days, the broader range being 4731-4353. A break from the 4350-4500 range will give a 150 point move. It is difficult to be bearish or bullish within a range as the Nifty gets shuttled between support and resistance.

You can be bearish seeing the head and shoulder pattern and the bearish rising wedge or be bullish seeing the falling wedge. You could feel bullish saying Nifty has held the support of uptrendline from March lows or feel bearish because the retracement is not even 38.2% of the fall from 4731 to 4353.Tricky situation.

Amongst the oscillators , the daily stochastics has given a minor positive divergence and turned up from oversold levels.RSI has not fallen below the 45 level and turned up. The half hourly oscillators are weak and the stochastics has given a sell in the overbought region. Confusing once again.


Be neutral and wait for

• a break from the range, and be long or short as per breakout
• a break from the neckline at 4350 (also lower point of range) and be short
• a break from the falling wedge at 4542 and be long
• a break from neckline of inverted head and shoulder pattern shown on half hourly charts
  

Else get whipsawed.

Happy Trading !!

Lakshmi Ramachandran
www.vipreetsafetrading.com

Reigning The Nifty - 20th August , 2009

Half Hourly Chart

Daily Candle Chart

Daily Line Chart

Observations

• Moving Averages on intraday charts all bearishly aligned. On daily charts the short term averages are bearishly aligned viz.5/10/20 dema.
• Nifty traded below 50dema intraday but closed above it.
• Nifty traded below the uptrendline from March 2009 lows intraday but closed above it. Closing below it would be very bearish.
• Daily oscillators are weak and the stochastics has entered the oversold zone.
• The neckline shown in pink on half hourly charts was once again tested but Nifty managed to stay above it. Break would give a downmove of around 350 points.
• Intraday oscillators are showing minor positive divergence.

Nifty is deteriorating by the dayand looks ripe for a breakdown soon. Bears are slowly but surely getting the upper hand.However till Nifty stays in the range of 4350-4731 trade will be choppy and only a break in either direction can give a respite from the seesaw. For the time being be light and trade with strict stop losses.


Happy Trading !!

Lakshmi Ramachandran
www.vipreetsafetrading.com

Reigning The Nifty - 19th August 2009

Daily Chart Showing Falling Wedge

Daily Line Chart

Half Hourly Chart

Daily Chart Showing OBV

Daily Chart

Intraday oscillators were oversold and I expected a short term support which came in the very first few minutes of trade at 4372.

• The upmove today lacked momentum and was very much a reaction to the previous day's fall.
  
• On Balance Volume, which measures negative and positive volume flow, has moved lower than the Nifty, having already reached levels it had reached on 13th July when the Nifty made a bottom at 3918. This indicates that Nifty could follow and move lower. This follows the technical analysis concept that volume precedes price.
• Daily Oscillators are weak but not reached oversold levels indicating the Nifty could move lower.
• Half hourly oscillators, barring the stochastics, have moved up from oversold levels but not reached overbought levels. Stochastics has turned up agin after giveng a sell from overbought region. So there are chances of some more upmove.
• The 5dema is below the 10 dema and 20 dema indicating short term bearishness.
  

Advance decline line has shown a minor positive divergence. The daily line chart shows that on a closing price basis the Nifty has moved above the uptrendline from March lows once again. Maintaining a close above 4433 for tomorrow will keep the price above the uptrendlne.On half hourly charts neckline (pink) support is at 4352 and the green neckline support is at 4321-4312. The 50 dema offers support at 4365. The falling wedge shown on daily charts has support at 4325 .

Though most indicators are indicating a weak Nifty, Nifty is near strong multiple supports around the 4325 levels. Trade shorts with strict stop losses.


Happy Trading !!

Lakshmi Ramachandran
www.vipreetsafetrading.com

Reigning The Nifty - 18th August 2009

Half Hourly Chart

Daily Candle Chart

Daily Line Chart

I voted for the bears and they won and how!

• The line charts shows that the uptrendline from March 2009 lows has been broken.However in the candle chart it has yet to be violated.
• Daily oscillators are in neutral zone suggesting some more fall to reach oversold levels.
• The half hourly charts show oscillators in the oversold zone suggesting temporary support may be reached soon .
• Neckline support coincides with 50% retracement levels of rise from 3918 to 4731 levels around 4325.
  

Supports and Resistance levels shown on charts.


Happy Trading !!

Lakshmi Ramachandran
www.vipreetsafetrading.com

Reigning The Nifty - 17th August 2009

Half Hourly Chart

Daily Line Chart Showing Support At Neckline Of Previous H & S Pattern

Daily Chart

Weekly Chart

Last week I concluded ,

As of now,

• The short term trend is down while the intermediate trend is still up.
• 4421 is the earlier low and the 38.2% retracement level of rise from 3918 is at 4423 which should be strong support.
  
• Below 4421, Nifty has strong support at 4325-4380 levels. 50 Dema is also around 4327 levels.
  
• The intraday charts show an oversold condition.

The trendline joining March lows at 2539 and July lows of 3918, shown in green, offers support for the week at 4250 to 4325 for the week. Holding this trendline will keep the bullishness of the upmove alive. One can look for oppurtunities to go long keeping these levels as a stop loss.

The Nifty made a U turn from 4359 as analysed and retraced 70% of the fall by end of the week, supporting the view of buying on the dip. Has the scenario changed in any way?

Momentum

On weekly charts

• The negative divergence on Rsi 14 and stochastics is intact,
• Macd is flattening after reaching overbought levels but yet to give a sell.

On daily charts

• The Rsi 14 is above 50 but looking lethargic.
• Macd is in sell mode.
• Stochastics is moving up from oversold levels.

On intraday charts

• All oscillators are once again moving down from overbought levels.

Moving Averages are bullishly aligned on all time frames and in favour of climbing the wall of worry.



Sentiment Indicators

• Volumes during the weak was on the lower side.
• Advance Decline line moved marginally up during the week but negative divergence intact.
• Put Call ratio is 1.1
• FII selling on the increase.
  

Bearish Price Pattern

• The action since May 14 low of 3537 has taken the shape of a rising wedge, which is a bearish pattern. Break down from the wedge could give a 1200 point move. Negating it would require the Nifty to break above the upper trendline of the wedge.
• Head & Shoulders pattern on half hourly charts. Break of neckline will give a down move of 300 points.
  

Bullish Price Pattern

• An inverse head and shoulder pattern is seen forming with neckline at 4700 .Break out from the pattern could give a 2400 point move up.

View

• Recent action - selling at higher levels earlier at 4731 and now at 4620.
• Has not been able to close above the 61.8% retracement level of the recent fall from 4731 to 4359.
• Entire run up from March has been too fast and without meaningful corrections,
• Momentum indicators on weekly showing mild negative divergences after reaching overbought levels,
• Low volumes showing lack of participation due to indecisiveness reiterating the fact that fundamentals are not supportive of a further upmove .
  

Indicators are not in sync with each other indicating we are very much in a fluid state.
At the moment being a chameleon will work the best. Since we have a bearish and bullish pattern in contention, it is difficult to be a bear or a bull. One must trade with strict stops as between 4350 and 4731 it is a ranging market whipsawing traders without mercy. Till the Nifty breaks out of this range or from one of the patterns discussed above , trading will be difficult as a diehard bear or bull.

Pssssst --- My vote goes in favour of the bears.

Happy Trading !!

Lakshmi Ramachandran
www.vipreetsafetrading.com