Though the candle for this week is a bullish candle and the Nifty made a new high , the action was almost within the range of 5349-5477 adding just 10 points on the upper end. The volumes As seen on the weekly chart Nifty has cemented support at 5349 since last four weeks. This becomes a crucial decider in defining further trend. Till this level is held Nifty will attempt to move higher.
Chose to analyse the Line Chart instead of the OHLC charts . Line charts put it across simply, clearly . After going through the noise in the OHLC charts, Line charts feel like a breath of fresh air. Just a glance tells you that, in the run from 4786 , the Nifty has taken three breaks, shown by the blue dotted lines, to catch up it's breath. The continuation after rest time has been with weakening vigour. Rests are getting more frequent.The run up after the first lap, which ended at 4366, has formed a rising wedge shown in green.
The rising wedge is a bearish pattern that begins wide at the bottom and contracts as prices move higher and the trading range narrows. Volumes fall as the wedge matures. Volumes have been falling since the first peak made on 21st June. This is in line with the pattern requirements. The support on the lower trendline of the pattern is at 5412.Resistance on the upper trendline is at 5491.
The two stages where Nifty took rest is at 5235 and 5367. If the rising wedge breaks down as anticipated, Nifty will seek to stop the slide at the previous rest zones of 5367 and then 5235, hoping to garner strength to rise again. After all no one likes to fall !
Cushion available at 5402- 61.8% retracement ( rise from 5349-5487 ), 20 dema -5399 , 5349-solid cushion on OHLC charts shown on weekly charts and 50 dema -5317.
Hurdles at 5472-5487-5522.
Happy Trading !!