AD Code

Thursday 31 May 2012

Nifty - 31 May 2012 - Chaotic Expiry Day

Amidst mixed technical signals & weak global cues, a chaos expected on Expiry Day.

As discussed yesterday, we saw the "Expiry Whipsaw" being setup yesterday, with the Nifty gyrating wildly within a small confined range of 45 points. The global cues are getting weaker, and we have avoided a 2% fall in Nifty for many days now. Today, we could see that on the bourses, and one needs to be ready mentally for that outcome.

1) The Elder Ray readings : Bull Power reduces from +72 to +34 Bear Power increases from +34 to -4, indicating that after a brief stay of just 1 day in the opponents territory, the Bears have regained their safe zone, and now would get ready for the kill. For today, the Bulls need to overcome 4985 to maintain their momentum, whereas the Bears need to breach 4945 to maintain their momentum. A down gap opening will tilt the bias towards the Bears.

2) The Nifty is now poised below all its key DMAs, and below its 21EMA, at its 13EMA and above its 8EMA, making it highly vulnerable to a fall.

3) The stochastics just touched the overbought zone, and are now showing a negative divergence, indicating a fall on the Nifty.

 


4) In the above chart, the volumes have increased in the yesterday's fall on the Nifty. The MACD is showing a positive divergence. The ADX is suggesting equilibrium in the Bull and Bears momentum, with a loss of momentum. The Parabolic SAR is continuing with its Buy signal. Overall, the technical signals are mixed in their directional indication, which could add fuel to the chaos today.

5) Considering the above,  our trading plan for the day is as under.

a) Below 4930, we will open fresh short positions with a SL of 4960 and a target of 4860. We will add to these short positions only below 4840.

b) Above 4855, we will open fresh long positions with a SL of 4840 and a target of 4920. We will add to these long positions only above 4960.

Happy Trading !!!
 

For cash market recommendations see our Daily Pre Market calls on NSE

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