Hi!
We find that the dilemma in the minds of traders is on the increase and the markets are becoming more and more risky for the reasons mentioned below in this message.
We start with the Weekly chart for spot Nifty. The black dotted line starts at the high of around 6338 on 5th Nov 2010. and last week’s candle has attempted to touch it. The chart also shows the support-resistance trend lines in Green and Red colours respectively, but last week’s candle has closed above the red trend line.
This could be a spike or could be a genuine breakout. Let us try to find more, using other information available, such as the Currency market. We find that for the entire last week, the US$-INR movement was extremely range bound So one may infer that possibly there was no major inflow or outflow of foreign exchange.
The movement appears to be range bound, so, instead of finding the targets for US$, I would prefer to check the daily EOD chart for spot Nifty, along with other relevant information.
The black dotted line is the one coming from the high of around 6338 on 5th Nov 2010. Obvious profit booking is seen on those two days.
Now the question is : Whether Nifty shall Cross this trend line and start trading above it, simultaneously taking support from this trend line, once it is above it.
Surprisingly, last few sessions had more declining stocks than advancing, and yet the Nifty stocks were moving up. This is definitely not a good sign.
Also during the last week, the daily trades were much less than average, there by indicating that people stayed out to get the correct trend for the markets, before joining the trades once again.
So the volumes were less during the week and yet the weekly candle has gone up, This, in my opinion, is a weakness.
Moreover, to cross the long term trend line and then to stay above it needs a large momentum which is gained due to large volumes. Unless something happens that stimulates the markets to get that momentum, markets may stay below this trend line and may drift lower for the near future.
But even if they drift lower, the gap created due to gap-up opening on Monday 6th Aug shall act as a strong support at 5260 level. Other support below is around 5220 as can be seen from the chart.
Therefore, the Foreign investors have a dilemma too, and are waiting to get some good announcement from the recently appointed FM, Mr PC.
If there are no fresh announcements which please the FIIs, the markets shall drift down.
But if there is one good announcement, not only FII but all the investors-traders would jump in to give an upward momentum to the markets, possibly to make an attempt to cross the dropping black dotted trend line.
So, till such thing happens, markets may remain dull.
That is my opinion and I could be wrong.
Cheers!
SS
We find that the dilemma in the minds of traders is on the increase and the markets are becoming more and more risky for the reasons mentioned below in this message.
We start with the Weekly chart for spot Nifty. The black dotted line starts at the high of around 6338 on 5th Nov 2010. and last week’s candle has attempted to touch it. The chart also shows the support-resistance trend lines in Green and Red colours respectively, but last week’s candle has closed above the red trend line.
This could be a spike or could be a genuine breakout. Let us try to find more, using other information available, such as the Currency market. We find that for the entire last week, the US$-INR movement was extremely range bound So one may infer that possibly there was no major inflow or outflow of foreign exchange.
The movement appears to be range bound, so, instead of finding the targets for US$, I would prefer to check the daily EOD chart for spot Nifty, along with other relevant information.
The black dotted line is the one coming from the high of around 6338 on 5th Nov 2010. Obvious profit booking is seen on those two days.
Now the question is : Whether Nifty shall Cross this trend line and start trading above it, simultaneously taking support from this trend line, once it is above it.
Surprisingly, last few sessions had more declining stocks than advancing, and yet the Nifty stocks were moving up. This is definitely not a good sign.
Also during the last week, the daily trades were much less than average, there by indicating that people stayed out to get the correct trend for the markets, before joining the trades once again.
So the volumes were less during the week and yet the weekly candle has gone up, This, in my opinion, is a weakness.
Moreover, to cross the long term trend line and then to stay above it needs a large momentum which is gained due to large volumes. Unless something happens that stimulates the markets to get that momentum, markets may stay below this trend line and may drift lower for the near future.
But even if they drift lower, the gap created due to gap-up opening on Monday 6th Aug shall act as a strong support at 5260 level. Other support below is around 5220 as can be seen from the chart.
Therefore, the Foreign investors have a dilemma too, and are waiting to get some good announcement from the recently appointed FM, Mr PC.
If there are no fresh announcements which please the FIIs, the markets shall drift down.
But if there is one good announcement, not only FII but all the investors-traders would jump in to give an upward momentum to the markets, possibly to make an attempt to cross the dropping black dotted trend line.
So, till such thing happens, markets may remain dull.
That is my opinion and I could be wrong.
Cheers!
SS
