Nifty was up by 0.8% last week. Tepid Industrial Productivity (IIP) number at 1.8% in December as compared to November was a Shocker along with a revised GDP outlook of 6.9% as against 8.4% in the previous year were the reasons of rally spoilers for the last week.India’s trade deficit too has soared to uncomfortable levels of US$ 14.7 bn.
On International Front Greece drama was and will be in Limelight for the following week,Eurozone dismisses Greek budget deal and holding back the Bailout fund setting 15 Feb as the dealing to Greece to come up with a solid plan worth implementing else Leave EURO zone.
S&P Downgrades 34 Of 37 Italian Banks on Friday.
Lets jump into technical of Nifty.
Last Week we discussed that 5435-50 range being the supply zone with various technical reason (Link to the Post)
Nifty did obliged to us and made a high of 5428 for the last week and started correcting from 5428.
Now Million Dollar question is it a trend reversal or just a correction? Lets try to find answer about it.
Nifty Hourly Chart
On Hourly charts Nifty is consolidating in the range of 5320-5428 with 50 Hourly moving average providing a good support.50 SMA Hourly stands at 5352 levels.
On Hourly charts shown above i have pointed all the 4 Gaps which have been left unfulfilled from the rise of 4640-428 on Nifty Spot. For a healthy rising markets such gaps needs to be filled as it can be considered as VOID left in a newly constructed building. Gaps will get filled in next down leg of Nifty most probably in February.
1 Gap :4641-4676
Keep watch on above levels as Gap provides an excellent trading opportunities.
Nifty Daily Chart
On Daily charts Nifty has been trading in a parallel channel with topping out formation at 5413,5423 and 5428. Supply pressure is coming on upside.
ON daily charts nifty oscillators are overbought and with persistent negative divergence as shown in below chart.But Blindly trading on negative diverge without price confirmation will lead to losses for a trader. Let the price break below 5320 to show the effect of negative divergence.
Support at lower level comes at 5251 which was trendline breakout point and 5178 which is 200 DMA.
Fibonacci Retracement of Nifty
50% fall from the highs. ie From High of 6338 to low of 4532 Nifty should retrace 50% which also comes at 5437,Nifty made a high of 5427 and started the correction.
Nifty Weekly Chart
Weekly charts after 5 week of rally 6week formed a DOJI pattern indicating slowing of momentum. Volumes for highest in recent weeks which can be a distribution pattern if unable to cross 5435 next week.
Also When we had the 14 weeks rally in 2009-10 we formed the similar DOJI pattern as marked in above chart and we had the fall in next week. Let see if History Repeat itself?
Global Market Updates
Falling Wedge formation with trendline breakdown below 1326. To be in downward swing S&P 500 should break 1290 on closing basis. It has been 1 way ride for low of 1158 to 1351 without any significant correction.
DAX is also trading in a parallel channel with high of 6829.DAX has also started its correction support exists at 6440
Nifty Trend Deciding Level:5320
Nifty Resistance:5363,5400 and 5440
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