Nifty Weekly Technicals for Week Starting 10 October

By | October 9, 2011

This Week will be remembered as Week of downgrades

  1. It started with Moody’s downgrading PSU Behemoth SBI Bank after it has corrected 35% from its High and 12 UK Banks.

  2. Fitch Downgrades Spain To Aa- From Aa+, Two Notch Cut, Outlook Negative

  3. Fitch Downgrades Italy To A+, Outlook Negative

  4. Moody’s Puts Belgium Aa1 Rating Under Downgrade Review

Rating agencies  supposedly the precursory warnings for investors. They are supposed to alert investors about the possible risks to their investment well before it reflects in the asset price. But when the whole world knows that EU countries are in Burden of Debt which is already reflecting in price  after that Rating agencies downgrading them but a question on their ethics of working.

Back in 2008, rating agencies found themselves in an embarrassing position after their best rated securities turned junk with the collapse of Lehman Brothers. The billions of dollars in losses to investors came at a time when rating agencies were still struggling to ratify their views. In 2011, the US’ credit rating was downgraded when the economy’s poor fundamentals were already reflecting in its currency’s exchange rate.

What it all suggests is that the rating agencies have done too little of their job, too late.

Nifty Hourly Chart

Its all Gaps which are ruling the Nifty Hourly charts. On Friday Nifty faced resistance at 4922 which is its trend line resistance as shown in above chart. Nifty respected it and corrected from Highs after EU opening. From past 3 trading session Nifty gives up 30-50 Points in Gain after EU opens in matter of mins. 

Lets see on Monday always expect the unexpected. 4850 is coming as support as per trendline below which breaking of 4720 probability will increase as we have almost touched it for 3 times and bounced. Will not be 4 time Lucky !!

Nifty Daily

On Daily chart we had a Huge gap up of 150 points  can be compared with a Mini Election gap up took most of bears by surprise, I did shared the view we need to trade in range of 4700-4900 for a few trading days. We traded in 5179-4905 range for 16 days in September Series and For October we have shifted the range one notch from 4700-4900.

Still Buying at Support and Selling at Resistance Looks a valid trade but its not everybodys cup of tea to go with that trade as emotions of greed and Fear rules when market are near Crucial support and Resistance.

Its your Risk Management System which will help you in doing a successful trade.

Nifty Gap Trading

 

Another Strategy which is working in this market is Gap Trading. Let me elaborate it with 2 Examples.

  1. I have been talking about the gap which occurred in Nifty on Monday Friday Low was 4924 and Monday High was 4979(Formed in morning trade),So we had a gap of  54 points which needs to be covered. These are Common area gaps which gets fulfilled.
  2. How can we use the above Information to our trading ?
  3. On Friday market opened Gap up and High made was 4922.75 and corrected from that level so as soon as gap got filled Shorts can be taken with a SL of 20 Points
  4. Now we have one more trading opportunity Gap between 4827-4861. If market comes near 4827 on Monday we can take a long trade with a SL of 20 points

 

Nifty Weekly

Nifty is  past 9 weeks  is trading within rectangular pattern between 5170-4720.The longer both indices consolidate within their rectangular ranges, the greater will be the significances of the eventual break outs.

Consolidation patterns tend to be continuation patterns. That means the previous down trends, before the indices entered rectangular consolidation zones, will continue. Probabilities of downward break outs are greater.

 

On Weekly charts the formation of Lower Top and Lower bottom is continuing which signifies bears in control of market. Break of 4950 and 5034 will lead to short term reversals.

Nifty Monthly

On Monthly charts Nifty broke the Monthly trendline briefly but quickly moved above it. Break of 4720 will lead to larger downside till 4300 in coming months as per trend lines.

 Break of 4720 and 4675 and closing below 4700 will lead to larger downtrend till than we will continue our ranges trading.

Nifty Trading Levels for Coming Weeks

Nifty Trend deciding Level:4950

Resistance:4982,5034,5069,5103,5143,5196

Support:4828,4771,4720,4765

 

Charting Software :http://www.brameshtechanalysis.com/charts/charting-software/

Nifty Pivots:http://www.brameshtechanalysis.com/charts/

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2 thoughts on “Nifty Weekly Technicals for Week Starting 10 October

  1. Bramesh Post author

    Dear Sir,

    I was unable to understand your comments. Please elaborate.

    Rgds

  2. girdharilal kuchroo

    you made me read rohit shrivastavas piece,i feel now you should give us some indian astrologers view viz kf cycle and sadi sati.no harm thank you

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