Reigning The Nifty - 18th January, 2009

Weekly Chart I

  

Weekly Chart II

Daily Chart

 Daily Line Chart

 Half  Hourly Chart

Bearish Case

• Doji on weekly charts after two small bodied candles in the previous two weeks signalling waning of upward momentum.
• "Inside Day"  formed on weekly charts signalling indecision.
  
• Weekly oscillators continue showing negative divergence.
• Daily oscillators continue showing negative divergences.
• Fall from 5310 to 5169 was on higher volumes than the recovery from 5169 to 5279.
• Half hourly charts show sideways move and failure to cross and sustain above the 61.8% retracement level.
• Half hourly oscillators show a lacklustre to weakening market.

Bullish Case

• Weekly , daily and half  hourly emas (barring the 5 half hourly ema) all bullishly aligned .
• The earlier support of 5160 held well..
• Held above the breakout level if 5182 for the third consecutive week.
• Double bottom shown on line charts with a target of  5354 still valid.
  
• Inverted head and shoulders pattern spotted on half hourly charts with the neckline at 5272 and a target of 5372 on a breakout.
  

My View

• Technically the trend continues to be UP , but further upmoves have not been too convincing in strength.
  
• Since we need to follow the principle of  " The trend is your friend",  continuing hedged longs would continue to be the strategy. Partial profits may be booked  too.
  
• The 61.8% fibo level at 5257 is proving strong resistance.Staying above this level will keep the bullishness alive.
• First sign of weakness would be a close below 5210 and first sign of  further strength  would be a close above 5272.
• Strong resistance at 5310 and strong support at 5160. Weekly chart I shows support at 5174 on the new uptrendline drawn from March 2009 lows.
• The Inside Day pattern breakout points on weekly chart is at 5310 & 5167. So one could get direction on break of either level.
  
• Final support at 4590 , the 23.6% fibo level shown on weekly chart I  which is also the neckline of the inverted head and shoulders pattern.
  

Happy Trading !!

Lakshmi Ramachandran
www.vipreetsafetrading.com