Nifty..last chance for bulls tomorrow ?

'Nightmare on dalal street' continues for bulls. Even a strong counter-charge by the bulls fizzled away in the end and they were pegged back deep down ,staring at even a steeper fall ahead. We wrote before, that violation of 5813 and the trendline would wake up lot of bears and bulls would run for cover. However, the low made by Nifty future on 28th Feb, 5673 [ from which a sharp rally of 300 + points took place  ] was a good support zone - in fact the range 5670 - 5700. It held on today for quite some time, but grudgingly gave away at the fag end. Daily and weekly chart looks scary as a result. But then, is it totally a lost case for this market to bounce back ? We believe only silver lining for the bulls today was the absence of a  complete, swift and sharp breakdown in Nifty future when it broke 5670 zone towards the end of the day. That somehow speaks of a little lack of conviction on the bears' side. However, this is not enough. We believe, bulls have a last chance tomorrow to take Nifty futures back to at least into or above 5670-5700 zone to keep the hope of a meaningful bounceback alive. Otherwise, daily,weekly and monthly chart of Nifty would acquire a very sorry look and bears would happily add on to their position.

Retail traders, as we also wrote in our last post dated 19th March, should do well to sit outside.

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Nifty ..trend-line breached ..battle lines redrawn..

Finally bears managed to breach through the defence of the bulls and pegged them back to a much lower level without giving them any opportunity to make a comeback throughout the day. On 14th March we wrote that day's low ( 5813 ) to be an important support level , breach of which is likely to attract bear onslaught. That's what exactly happened today.

Now as we see from the above chart, bulls made a clear retreat and conceded large grounds to bears, Nifty future basically moved into a no trade zone. War is not over yet but battle lines are definitely redrawn. On the downside 5675-5700 area is very important from two perspectives .. A ) Being the recent low from where a 300+ points rally started and B ) also being an important support area in the longer term monthly chart. On the upside 5800-5820 area likely to act as key resistance. Therefore this 100-150 points zone becomes the new battle ground between bulls and bears. Any violation of this zone ( up or down ) to attract swift covering / unwinding and addition of fresh positions.  Retail traders are advised to open fresh position   ( long or short ) only outside this zone and not to get caught in this fight unaware !

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Nifty... remain bullish above critical trendline

In our recent posts, we argued about this downward trend-line which Nifty future broke through successfully on 7th March and made a re-test of the same on 14th March. We also said that its critical for the  bulls to defend this extended  trend-line  [ pl see chart above ] as it has now become a new zone of support. Today's action , though  a bit unnerving for the bulls, they should not be unduly worried till the time they successfully defend this trend-line  In fact, risk reward is now in favour of the bulls as they have a well defined stop loss level i.e a downward breach of this trend-line.

We continue to maintain bullish outlook on the longer term charts and only a March monthly close below 5700 would alter this view and we would become bearish. But till that happens, bulls have advantage on their side.

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Nifty ..poised to go higher

We argued [ please refer earlier posts ]  that soon Nifty would resume its uptrend once the short term overbought condition is released. We also spoke about this down trendline which Nifty future breached successfully recently. To make this uptrend more healthy , a successful re-test was desirable, though not necessary. Both the events coincided today - i.e overbought condition was released to a great extent and Nifty future successfully re-tested and bounced from the said trendline ( please see the chart above ). We also argued earlier that resumption of the uptrend was just a matter of  time. And this upmove will have primarily two targets -taking out the recent high of 6120 made in 29th Jan'13  and then move on to take out the all time high levels.

Today's move is a first step towards this goal. Bears are trapped badly and its going to hurt in coming days. And for bulls - today's low become a important reference point of support, below which the story changes.

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Nifty..catching breath before next move ?

Nifty future in consolidation mode after the sizzling rally of 300+ points. During the last week's non-stop rally , Nifty future became extremely overbought in the the short term hourly chart. And before the next move takes place, its desirable ( though not necessary ) that the overbought conditions get released before Nifty can resume the uptrend. It needs to catch some breath and gather enough steam before it makes a dash to to take out the recent high around 6120. In our opinion, today's and yesterday's action seemingly  represent that activity.  Medium & long term trend  remains positive. Short term trading range is 5950-5850. Once the overbought condition is relieved,fresh buying to emerge in this zone and Nifty to resume its uptrend.

And its going to happen sooner than later. So keep watching this space for more updates....

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Nifty at new high ?..a matter of time only !

Solid weekly close for the bulls..bears squeezed hard ( din't we tell you dear readers ? .. Newbies - please read our earlier posts ). The bullish engulfing pattern on the weekly chart kept on becoming stronger as the trading session progressed today. Bears were caught in a hapless situation. Bulls added on to their long positions.It has been a non-stop , breathtaking 300+ points rally from 5670 area. Not a surprise for the readers of this blog, though ; they knew all along what was coming.

Now, what would be the next move ? A little bit of consolidation ? - possible ; but the way the bulls have strengthened their grip on the situation now, a straight run to  the recent high of 6120 ( pl refer chart above ) and beyond is more likely.

We argued so many times earlier ( refer earlier posts ), that bullish case scenario is the most likely one as longer term charts are in bullish mode. And in that case Nifty making  all time new high remains just a matter of time. The bottom-line is  - risk reward ratio is heavily loaded in favour of the bulls now. So, those who are in the right side of the market, enjoy the party !

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Nifty on a breakout - Next is what ?

Nifty future breaks out above the down-trend line [ pl see daily chart above ] and other coinciding barriers   ( please refer to our  yesterday's post ).  The indication was clearly there, we argued yesterday, by tracking the breakout on RSI, a leading indicator.   It also looks well poised to clock a 5900+ weekly closing tomorrow - something we are consistently arguing for the last few days. Pl refer to the weekly chart posted above. A bullish engulfing pattern is in the making.

Bears started unwinding their position , as evident from last 45 minutes of action . More unwinding to come  tomorrow if bulls hold their ground in this 5860-5900 zone. 

We are continuously  keeping a bullish outlook from 5650-5700 zone and this view will be reinforced in case we get the weekly close we are talking about. Fresh long positions to be added in such a scenario and in all likelihood the recent high in Nifty future ( 6120 ) will be taken out sooner than later.

But before that, wait for the confirmation move tomorrow !

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Crucial test ahead

Good follow up and consolidation today  on yesterday's  gain and  the market seems on its way to a solid rebound. We already argued yesterday, any weekly close above 5900 would  squeeze the bears hard. But before that happens, have a look at Nifty future daily chart ( as on 6th March'13 market close ).

Multiple speed-breakers lie ahead. First the downward sloping trend-line corresponding  to the recent downtrend that started from 6100 level. Second the already existing resistance of around 5860 level and last but not the least, 20 DMA , which is supposed to act as a resistance.

Now have a look at the above chart. All three factors are almost coinciding around 5860-5880 range. Therefore, bulls have their task cut out. A successful breach of this level either tomorrow or day after will force bears to start unwinding their position and that may lead to the 5900+ weekly close scenario we are talking about. However an unsuccessful attempt would equally pave the way for bears to take the market down to recent low in coming weeks.

A silver lining for the bulls though  is the break-out which already took place in RSI today ( which is supposed to be a leading indicator ) .See the above chart for the RSI breakout that we are talking about.

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So far so good...Nifty taking support ?

In the last post, we argued that strong support exists for Nifty future in the 5650-5700 zone and though the trend channel was broken,it was not to be taken too seriously , unless and until this support zone is taken out. This week, till now ( i.e. 5th march market closing ), Nifty behaved the way exactly we thought it would. So far so good, it seems. If it remains like this, last few weeks down-move will then be considered as nothing but a retracement  of the recent upmove. We also argued in the last post that longer term charts are still in bullish mode. This weekly closing would make for an interesting watch. A weekly close above 5900 would squeeze the bears very hard and prepare the ground for next 200-250 points upmove. On the contrary, if bears manage to make a strong comeback in the remaining part of this week and ensure the fall of 5650-5700 zone, bulls would be bracing for really rough times. Which way it will go ?

Our trading philosophy prevents us from 'predict'-ing ( we love to react , actually ! ) market movements, still we are slightly tilted towards the Bull-case scenario.. and this is strictly because of the set-up in the longer term charts.

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Channel broken,but close to support

Bulls took a severe beating this week - as expected and posted in our earlier commentaries - and Nifty broke the channel and sold off. This channel was running since June,2012. Breaking of this channel initiated the sell off what we seen last couple of days,but on a longer term perspective,8 month old channel is not too significant. Short term momentum oscillators are already oversold,but they can remain so for a long period of time. More important is that Nifty future is close to strong support zone (5650-5700 ).. Please see the chart above for reference.

Its quite possible for Nifty to take support at this zone and consolidate.. Why we are saying this is because of longer term charts are still in Bullish mode..

But we will definitely revise our above outlook if 5650-5700 area also falls.

With Smart Kapital, stay ahead of the market movements  and keep watching this space for more!

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