This is an important area both in terms of price and time.
Im not referring to Ganns theories or anything like that, but its just the way the charts are panning out.
To recap, last week a couple of important events happened in a near copybook manner:
A 50% Fibonacci retracement happened on the Nifty from the beginning of the rally last April/May. The level accordingly is around
2590, and the Nifty hit a intraday low at
2595, the lowest it has been in this fall.
Then, important levels like 200 DMA, 200 EMA etc were tested on Friday.
Further, besides the
2595 bottom, another important support that has been created is at
2634, the low on Thursday.
This more than anything else is coming up as the crucial area at this point.
If this is broken again, then perhaps
2595 may not hold the fall.
Another short term important level is
2860 area where the late day sell off was arrested on Friday.
In the near term, what one wants to see is a trading dependable trading range.
In other words, a confidence building exercise has to happen to bring back the traders and the volumes.
For a trading range, in the short term, this was written on Friday:
AMITBE said:
The 200 DMA tryst at 2913-1915 area is all but done, and we are in some tentative levels now.
One cannot say for how long the Nifty would play around here, and how far higher, if at all, the move may test.
For the record, 2991 is the 20 DMA.
2984 is the 20 EMA.
2883 is the 13 EMA.
This morning I had also mentioned 2865-2877 as being important levels.
These are a few important levels to keep in mind at this time, in case a trading range should develop in the very short term.
For now 2898-2886 forms an important support.
To the up a crossover at 2920-2926 could lead to test 2944.
To all these levels, add the lower supports mentioned above, and that for me would form a reasonably decent range to consolidate.
And unless consolidation happens, Im not going to trust any rally.
For now
2925 and
2945 are the levels to hold to the up.
A crossover at
2961 and
2974 would be great.
For supports, briefly the
2840-2845 area is crucial at this point.