Food inflation rises to nine-month high of 12.21% and after that the Indian Government has done another Petrol Hike by Rs 1.82 which will go ahead and increase fuel inflation also. This fuel price Hike after Petrol de regulation is burning big holes in pocket of indian consumers and goverment has told in strict sense that Price will not be rolled back.TMC has opposed the fuel price Hike and submitted resignation. Ratcheting up pressure on the government to rollback petrol price hike, MPs of Trinamool Congress, which has threatened to pull out of government, will meet PM tomorrow and this news will be fuel rumors in market and hence trade with caution.
The next week will be truncated week with Holiday on Monday and Thursday so not much commitment should be accepted for traders. Try to exit positions on Intraday basis as gap ups and gap down can eat away your profits.
Nifty Daily Charts
Nifty has again entered into its trading range from 5200-5326 after the Big breakout above 5170. Nifty has rallied almost 700 points in matter of 17 trading sessions which invites a small correction which we did till 5200 and trading in a range to let the moving averages do the catch up.
As i always suggest the best strategy to trade in trading market or range bound market is to Buy Weakness and Sell Strength
Buy at Support ie but around 5200 SL 5169 and Short at Resistance ie. 5330 Sl 5345
Range Bound market are difficult to trade and its not everyone cup of tea to trade hence always limit your position in such market. Do not make a Huge commitment in any trade.
200 [email protected] is a tough resistance to move above in a bear market. As seen in above chart Nifty last time also tried moving above 200 DMA failed in 1 attempt than consolidated to gain strength and one more attempt was made as shown in Green Circle in above chart.
2 Attempt also got failed and after that Nifty collapsed till 4720. We can witness the same repeat again if we are unable to cross 5400 in November Expiry.
Importance of Crossover of 200 DMA and 50 DMA
200 DMA and 50 DMA are very important indicator for strength of market.
If Nifty/ Stock is 50 DMA is trading above 200 DMA Nifty/ stock is having strength technically and its in Bull market
If Nifty/ Stock is 50 DMA is trading below 200 DMA Nifty/ stock is having weak technically and its in Bear market
Now look at the above chart of Nifty and India VIX
In first half ie from 2008-2010 Nifty 50 DMA was always above 200 DMA and hence every correction was used to Buy the market and to be sold at next highs but from April 2010-2011 50 DMA is trading below 200 DMA and hence every rally is getting sold off into.
Hence we can say the rally is not the end of Bearish run and hence more pain/correction is to come over.
Please note the above observation is not for trading reccomdation in Nifty but an observation worth to be noted over and remembered before making any Big commitment in market.
Nifty Reacted from Golden Ration 61.8%
Nifty Weekly Charts
On Weekly charts Nifty took support at 20 W SMA @5202 and gave another upmove till 5324 which again got sold off.
Last Week Nifty has formed a Weekly Inside day candle its a very strong indication of Big Up move coming next week, once 5360 gets broken on upside or once 5202 gets broken on downside.
As next week is a truncated week we can see volatile and big moves in term of gap up or gap downs.
Nifty Monthly Chart
On Monthly charts Nifty is down -0.8%, after 7.8% move in Month of October.So as per previous charts and data i accept November month to be a month of consolidation and range bound market with a Caveat no GLOBAL BLACK SWAN EVENTS HAPPENS.
Nifty Trend Deciding Levels:5325
Resistance:5360,5410,5432 and 5480
Support:5256,5200,5170 and 5140
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