Reigning The Nifty - 8th October, 2009

A bearish engulfing pattern confirming the evening star pattern. On the other hand there was a higher high and a higher low candle made.  The previous day's low  was held which is a saving grace to the longs.

Daily Chart

We once again have a head and shoulder pattern forming and have to see whether the neckline gives or the head is blown off once again to make higher highs.The neckline offers support at 4927. Incidentally , the 20 dema is also at 4927 thus making it a very important support. Break of the neckline at 4927,   could have a down move of 200 points from the neckline which calculates to 4727. The neckline of the bullish inverse head and shoulders shown in red is at 4702.

Daily Chart showing failed Head and Shoulders Patterns

The daily oscillators are moving down from overbought region and have made a lower low indicating that Nifty too may break the low of 4904. Nifty has moved below the 5 and 10 demas but all the moving averages are still bullishly aligned.

Half Hourly Chart

 The half hourly moving averages are all bearishly aligned except the 200 period ema. The 200 period ema is at 4938  . Lets see if it offers support once more to the  Nifty. The close held above the 61.8% retracement of rise from 4921. This may see some effort to make a recovery.The green downtrendline offers resistance at 5065-5055 for the day.A breakout and close above it will lead to highs and be in line with what the Nifty has been doing since May 2009.

Strategy remains the same  : Be neutral  till  clarity of direction emerges.



Happy Trading !!

Lakshmi Ramachandran
www.vipreetsafetrading.com