- Nifty gapped down leaving an unfilled 100 point between 5323-5230. Weakness will prevail till the gap is filled.
- The 100 wema has been decisively broken and the weekly closed below it for the second week in succession.
- The pink trendline on chart II which was support since the bottom of 4675 too has been broken decisively.
- The neckline formed around 5177-5197 has been broken decisively with the gap down action and Nifty has closed below it for five days in a row. Friday's action shows this level as good resistance now.
- The first fibo confluence at around 5380 has been violated.
With the extreme weakness existing one could safely assume that the bears will have an upper hand till the resistance of 5265-5310 and then 5565 is conquered.The next fibo confluence is at 4786.The bottom for 2010 was 4675 and the green neckline at 4650 of the inverted head and shoulder pattern which I have been showing since mid 2009 forms a strong support area.The weekly oscillators too are approaching the oversold zone.So watch out for the 4650-4786 area where there is a high probability for Nifty to reverse.
Half Hourly Chart
The half hourly chart reiterates the area of 4860-4837 as strong fibo support.The latest action after the gap down on 5th August , has formed a pennant which is a continuation pattern. The weekly candle , a high wave doji, shows indecision and could be signalling a change in direction.So wait for a breakout from the pennant,which is a symmetrical triangle, and trade in that direction.
Breakout levels on the pennant are 5185-5177 on the resistance line and 5070-5100 on the support line.
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