Thursday, March 13, 2008

Short term trend looks bearish

The Nifty traded weak in early trades taking cues from the weak Asian markets. The continued supply and the break down of some crucial technical levels pushed the Nifty to further lows in the late afternoon trades, with increase in volumes. The Nifty opened at 4868.70 and made a high of 4872 during the early trades. The Nifty drifted to the low of 4580.15 and closed at 4623.60.

The Nifty March futures closed with 12 points discount. The Nifty futures witnessed an increase in volume. The Sensex breached the low of January 2008. However, the Nifty and Nifty futures are trading above those levels.


Nifty violated some crucial levels and near to 75% retracement support level. The Nifty breached the good support at 4620 on an intraday basis, and closed above this level. However, the sentiment becomes weak with breach of this support level.

The Nifty traded and closed below the crucial short, medium and long-term averages. The Nifty formed big black candle, following yesterday`s the grave stone doji formation. This shows the short term trend looks bearish. To confirm this, both the stochastic and RSI in the daily charts generated a fresh sell signal. The faster line of MACD in the daily chart diverged from the signal line. This is also a bearish sign for the short term. The ADX and swing trade are in sell mode. The Nifty`s lowest close since 19/09/2007 also suggests the weak trend.

In the weekly charts, the faster line of MACD breached the zero mark. Both the stochastic and RSI are in sell mode and nearing to the over sold zone. The weekly trend is bearish.

The only consolation from the charts is that Nifty has a chance of taking support at 75% of retracement of the rise from 4,002.60 to 6,357.10. The retracement level comes near to 4,591. Any close below this level will extend the losses further. The daily close below 4,524 or a weekly close below 4,572 will be a first indication for the further fall.

The Nifty has support at 4,620, 4,572-4,591, 4,524, 4,363 and 4,155. The Nifty has resistance at 4,733, 4,803, and 4,859-4,878.

Strategy- High-risk appetite can adopt derivative strategies in Nifty rather than a naked position. Rest of the class of the investor can adopt a wait and watch attitude.

No comments: