Nifty: Daily Price Analysis

[SwingKing]

Nifty Price Analysis 3rd June 2010

Nifty continued its upward journey and closed at 5110. The band of 5130-5170 poses good resistance and today we saw the market facing resistance at this band. In case the market continues to march ahead, we will then have to review our positions at post 5200 levels. In the chart shown below, I have marked few resistance lines which shows as to why the band mentioned above poses strong resistance.

Volumes today were not at all supporting the broader tone of the market. However, Momentum indicator currently plotted below points towards downward momentum halting temporarily. Another leg of down move will be spotted once the momentum trend will be violated.

Our broader term channel, highlighted in black remains our life line as far as deciding market trend is concerned. If this channel gets violated, we will see sharp move to the downside. My experience in working with trendlines and trends has taught me that market in any direction moves in three stages (Accelerated stage, painful stage and finally flattening stage). At present I feel we have entered the second stage of market declines. This is a phase where market goes down at a more slower pace and is painful to trade. This view will get violated if the market's manage to make new highs or even close above some key levels (5280,5330).

Lets see how things shape up.

 

[simple_trader]

NIFTY is making difficult to trade. I have been concentrating on individual stocks where things are comparatively better.

One thing about NIFTY, we can not rule out a situation where NIFTY makes another 52 weeks high and touch the resistance line. After that a big down move to 4500 what all are expecting.

One can argue that this guy is gambling/predicting market. I do not think it is predicting, all I am saying, we can touch upper line of current channel and then it can break lower one with force. Of course this is one of the many possibilities.

About gambling, no one would trade for what we are thinking today, everyday we adjust our trade with the market situation.

Happy trading!

 

[AW10]

Slightly off-track post.. but helpful for getting the realistic view of bigger picture..
It is delight of technical analysts (or TA part of us trader) -

I came across these 12 charts hence sharing with u guys here (pls chk out the link below) .. it does excellent comparision of current market situation with various past scenarios.. Find out yourself if we are at the top of current bull run or not.

http://www.businessinsider.com/the-...ket-this-rally-is-getting-long-in-the-tooth-1

Many bulls on TJ will say that "But that might be true for US mkt.. but not for India".. but you take your own call keeping in mind how sensitive our market is to FII money and how well linked our economy is to global economy.

Current high volatility is typical indication of mkt turns. IMO, (and I might be wrong), it is heading more towards turn from upside to downside i.e. begining of mark-down phase. If bulls are still around then why is mkt going up in such low volume. If you observe the amount of volume on cluster of bars at each of previous lows, then at each low, the volume is dropping. To me it indicates less and less bull/bear fight at new lows. so somewhere old bullish positions have to give up, or new bulls need to jump in. I don't see a reason why would smart money be crazy to buy at mkt PE of 21 and expect the market to give them a PE of 25.. and specially when global economy is struggling. For me, fundamentally, PE needs to come down to 17 or below level to make it attractive for fundamental buys. And for that, either price needs to fall or earning needs to rise. I see less chance of earning rising in coming days due to struggling global economy, so only option then is that price to come down. Till then I remain bearish on intermediate to long timeframe. My views could very well be wrong, if central banks decide to take different path to fight double dip recession. They are close to hiking rates, but if they don't then we might we might see extended sideway move with 10% up-down range like last 8 months.

Just sharing my view.. Please do your homework and form your own views.

Happy Trading

 

[scplindia]

China has been continously falling, It is a big economy and major exporter to US & Europe. This effect will soon be passed on to the other world markets, unless the trend changes in China.

 

[SwingKing]

Hidden Divergence in Nifty

I was going through the broader term charts of the Nifty. I came across what is called 'Hidden Divergence' in the Index. For those who don't know, Hidden divergence is when price makes a higher low and oscillators make a lower low. On a weekly note, this is precisely what is happening. We do have a strong hidden divergence which is being confirmed by Stochastic and MACD both.

The validity of the signal needs to be further looked into. A good area to start with would be to look again at global markets over the weekend. The implications of this could be that we could be heading higher for the short term (Sideways to moderate upward bias). When looked in the broader term horizon this would probably fit our view. We have had a 5 wave decline in May which should be followed by a A-B-C retracement. This hidden divergence could help us complete the 'C' wave retracement. We would then again move down in a 5 wave pattern thus completing the 5-3-5 structure. Usually this is difficult to say because the corrective structure of the EW is perhaps one of the most deceptive aspects in TA. It is only over time we would see how the waves span out. Our broader term channel along with this divergence needs to be included and analyzed in the broader term view. Over the weekend, I'll be looking into these aspects.

 

[scplindia]

Looks like negative divergence is it.

 

[SwingKing]

Looks like negative divergence is it.

Negative (Bearish) divergence is when Price makes higher high while Indicator making lower high.

Positive Divergence (Bullish) is when Price makes lower lows and Indicator makes Higher lows.

Hidden Divergence is when Price make Higher Lows and Indicators make Lower Lows.

Tc

 

[rrmhatre72]

Negative (Bearish) divergence is when Price makes higher high while Indicator making lower high.

Positive Divergence (Bullish) is when Price makes lower lows and Indicator makes Higher lows.

Hidden Divergence is when Price make Higher Lows and Indicators make Lower Lows.

Tc

Hi Raunak,

Totally bouncer for new guy like me.
Pls explain with some example.

 

[rajputz]

Hi Raunak,

Totally bouncer for new guy like me.
Pls explain with some example.

Hope the below image helps in getting the example...

 

[praveen taneja]

If you have a harem of 40 women, you never get to know any of them very well.

rajputz
leave 40 you would forget ur name as well:rofl::rofl::rofl::rofl: