Nifty Technical Outlook

By | April 4, 2010

Nifty made a new 52 Week High @5329.55 levels but bulls were unable to sustain at higher levels.

  • Last Week we saw Bulls facing resistance at 5330 levels and than reversing from that now 5330 if not crossed now will become double top and can be a bearish sign.
  • For authentic breakout of this upward resistance, the index need to stay above the 5330 for  at least 3 days or it needs to go up minimum 3% (presently around 5450) of the respective value.
  • A negative crossing of 100 DMA over 50 DMA during this week had made some bearish sign for bull in medium term,This needs to be nullified by golden crossing ie. a upward crossing by 50 DMA over 100 DMA
  • MACD and RSI are showing some feebleness in the current scenario.

Support For Nifty @ 5260 5230 and 5185

The previous multiple resistance zones of 5185 might seal Nifty from further downs by acting as a reliable support. (Once a resistance is broken it might start acting as a support level).

Resistance For Nifty @ 5330 5360 5400 and 5450 (Ultimate Target)

If we see the weekly charts we can see declining volume on Week on Week Basis and a Doji Formation on Weekly Charts ,Please Keep in mind if 5330 is not broken on early part of this week Bulls are in trouble and can see levels till 5185.

Food For Thought :

During this period of 21 years, there have been 16 instances of a sustained rally in the Sensex for seven straight weeks. What happened in the 8th week in these 16 cases? In eight instances, the subsequent week has reported a continuation in the Sensex rally. A 50% positive outcome (8 out of 16) is hardly comforting.

Therefore, the probability that the rally will continue this week as well does not seem that likely.

On those occasions when the Sensex has actually continued its momentum, it has risen by an average of 1.85%. The index has seen a maximum gain of 3.63% and a minimum gain of 0.17%. In the eight instances when the Sensex has actually reversed its trend following a seven-week rally, it has averaged a drop of 2.50%, with a maximum fall of 4.70%.

For those who are betting big on the market, our advice would be to exercise caution. The chances for a reversal are getting higher. The markets may take a breather after this prolonged rally. On the contrary, the macro-environment of low interest rates in developed nations may mean than the index will continue to surge.

Leave a Reply