Nifty

NIFTY

On nifty the 5200 level continues to be a strong support and, as seen in the chart this level has provided support quite a few times in the past and also has provided resistance on many occasions. This time is no different also on this occasion we have what a trader might call as a “bullish flag” with support at 5200-5170, below this level the pattern  becomes invalid, the likely target of this pattern is 5500 and above but this only after the nifty closes above 5350 and then above 5400 with strong volumes .

If we see the chart on a slightly long term basis there is a slight +ve divergence on the nifty which can be heartening for the bulls, however a close below 5170 will lead to the failure of the bullish flag pattern as well as the +ve divergence and the index then is likely to touch 5100 and lower levels, a close above 5350 will provide momentum to the bulls and then they can try and take out 5400 and set the index up for a new rally, however for this high volumes are must.

Points to keep in mind in the coming days

1>     For the short term traders amongst us who have short positions it makes sense to keep a trailing stop loss as we are near to a strong support area, the trailing stop loss can be 5 DMA or the 1000 minute moving average.

2>     For traders who are looking for a long entry it might make sense to wait for a close above 5350 as between 5350 and 5200 the market are likely to be choppy.

3>     For traders who already have long positions 5170 will act as stop loss also they should watch out for the 990 level on SnP 500 for support.

4>     From highs of 5400 the recent correction is only of 3% which is not a significant for those amongst us looking for value bargains, at the same time it is not frightening enough for long term investors to start thinking about profit taking