Nifty Weekly Technical Analysis:Are we in Bubble Territory?

By | October 10, 2010

Nifty 5 Mins

Before giving a Technical Perpective let me give a Fundamenta Perpective on Nifty

As per Emkay Reaserch Report we are still having valuation Comfort and still not in Euphoric ZOne

Valuation comfort: Previous peak valuations in 2007 were at 24.5x/20.4x 1FY/ 2FY EPS respectively.

Current valuations are at 19.3x/16.1x 1FY/ 2FY EPS respectively.

Lets have a look at Minutes Charts: We can see a positive divergence which is  visible in all Indicators in the above charts.Hence Next week we can continue with our run up as we have 4 days time correction and 2 Trading days of Price Correction.

Nifty Daily

On daily chart Nifty exhibiting “descending triangle” which is bearish breakout pattern if lower trend line breaks. Price is now near to lower trend line, and moving with in triangle.

Nifty next resistance seems at 6,180 while support at 6,080 if nifty breaches 6,180 then we could see rally up to 6,220 on the flip side if the level of 6,080 breaches decisively then we could see fall up to strong support of 6,020.

Technical momentum indicators are currently suggesting as below:

Stochastic is currently moving in neutral zone, on the brink of entering into oversold territory indicating profit booking.

RSI is reversing back after touching oversold zone and indicating more correction is due in near term.

MACD is crossing and showing negative divergence, also indicating Nifty is in profit booking zone

Nifty Weekly

On Weekly charts we have still maintained with the trendline as shown in charts and Hence we are in uptrend on weekly basis .

Technica Indicator Parabolic SAR is still in Buy mode

Weekly Pivot :6131

Weekly Support:6040 and 5971

Weekly Resistance :6195 and 6287

Looking at the above chart confirmation we need to see price action on daily charts as they are suggesting downside but on weekly basis we are still in Buy mode. Day trend will turn up once we close above 6180

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