Nifty Weekly Technical Analysis for Week Begining 12 March

By | March 11, 2012

The Week gone by ended with  CRR (Credit Reserve Ratio) cut of 75 BPS from RBI.  It was a Surprise in term of Timings as we have credit policy on 15 March and quantum. Most Optimistic market participants accepted only 50 BPS, 75 BPS was quiet a surprise as it pumped 48,000 Cores in market.

Another Shock which came late in evening was ISDA (International Swaps and Derivatives Association, Inc.) saying  Greek CDS (Credit Default Swap)Triggered By Use Of Collective-Action Clauses.

Let me explain CDS in layman term:

Suppose you bought a Car insurance that was supposed to pay out if you got into a car accident. If suppose you got into car accident than insurance has to repay for damages as per insurance policy and if suppose your car does not met any accident for the term of insurance insurance company will not pay out anything  .

Triggering of CDS means Payout of a net $3.2 billion needs to be done to banks,institution who bought the CDS.

Will it trigger a panic in financial system

The net payout on Greek CDS will likely to be $3.2 billion, and most of that money has already been set aside by the companies who will have to make the payments, according to ISDA.

Also Financials system is flooded with 529 Billion Euros of LTRO money so this amount is a dwarf amount and it shall not create any panic in market.

Panic if any shall be bought into by short term traders.

Coming Week will an eventful week with lots of Economic Data on every day which will market very volatlile

  1. 12th Mar IIP
  2. 13th Mar US FOMC rate Dec.
  3.  14th Mar WPI and Railway Budget
  4. 15th Mar Credit Policy
  5.  16th Mar Budget.

Lets Jump into technical

Nifty Hourly Chart

On Hourly charts Nifty closed above 50 Hour SMA@5300. As seen from above chart 50 HSMA was a potential resistance zone and closing above it is bullish.

Friday Gap Area:5292-5220

 

Nifty Daily Chart

Classic example of Resistance becoming Support. Nifty consolidated in 14 months channel and upper trendline resistance comes at 5160 which coincidentally was 200 DMA.  Last week fall took support at the trendline and we saw a fierce bounce back.  Next Week 5171 becomes a crucial support.

 

200 DMA is defining line between bulls and bears. Bulls took support at 200 DMA  and we started a new rally. Now we had a surprise rate cut decision which will add more fuel to rally.

RSI touched the 20 levels and Stochastic is giving indication for a reversal.

Most important resistance for Monday is 5400. Closing above it will change the short term trend to bullish.

Nifty Fibo Chart

Fibo Ratio 5172-5630 is drawn in above chart.

38.2% 5347,50% 5401 and 61.8% 5455. 

 

Nifty Weekly Chart

On Weekly chart Nifty closed down by 0.5% and 3 week in a row. The correction which started from 5630 ended at 5130 and consumed 3 weeks. Next week can be a potential reversal week. Weekly Candlestick has a long tail formed which signify buying demand near the support levels.

As i have mentioned in above chart red circles are Supply zone and Blue Circles are demand zone. Nifty reacted from demand zone.

Close above 5450 will turn Nifty momentum up on Weekly time frame also.

5400-5455 is crucial zone.

Positional Shorts Keep sl of 5455 and Longs who are holding from lower levels can do profit booking around this level.

 

Nifty Monthly Chart

Nifty Trend Deciding Level:5400

Nifty Resistance:5455,5506,5542,5574,5600 and 5630

Nifty Support:5292,5243,5200 and 5160

 

Let me go by Disclaimer these are my personal views and trade taken on these observation should be traded with strict Sl

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Say you bought insurance that was supposed to pay out if you got into a car accident. Then you got into a car accident. And a committee met and decided that, actually, you did not get into a car accident.

7 thoughts on “Nifty Weekly Technical Analysis for Week Begining 12 March

  1. MUKESH

    hi sir

    how to correlate technical analysis and options strategy

  2. Bramesh Post author

    Dear Sir,

    We do not trade on news but rather trade on levels.

    Rgds,
    Bramesh

  3. Bramesh Post author

    Dear Sir,

    I give least preference to indicators for trade initiation. Always try to study the price it helps a lot to be on right side of trades. Indicators are always lagging they move once price has already shown its effect.

    Weekly close above 5455 will put momentum on upside for Weekly time frame also.

    Rgds,
    Bramesh

  4. Saumitra

    BRAMESH SIR,
    GOOD LEVELS FR MONDAY……AL D BST 2 TRDERS N INVESTORS FR NXT WEEK.SIR PLZ TELL ME WAT IS D EFFECT ON BANKING STOCKS AFTER CUT IN CRR…..MOST PROBABLY I THINK THRE SHUD B CUT OF 25-50 BPS IN REPO RATE ALSO…..SO WATS D IMPACT OF ALL THSE IN B NIFTY IN COMMING WEEK…..:)

  5. savio

    hi excellent brother good levels to trade on monday===where is the bias up or down as weekly indicators are in sell mode and daily is oversold and boucing back

  6. bhavin

    Bramesh,
    The way u explain CDS is simply gr8.Any layman can understnad this easily.

    Thanks….

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