After 3 weeks of downturn, no signs of a turnaround yet. But the fall may get arrested.
Let us start with the week gone by.
On 7th May we said, the "Nosedive starts", the Nifty opened lower with a down gap of almost 70 points, went lower, and then rallied on the news of GAAR clarifications. Although the Bulls never were able to 200 DMA levels and the Nifty closed at 5114 with a gain of a mere 27 points.
On 8th May, we reiterated our reading and suggested, "The trend is still downwards" , the Nifty opened flat at 5115, and then nosedived straight to 4984 before closing at 5000. That day, the Nifty not only gave up all the gains of the previous trading session, but lost more by closing a whopping 114 points down.
On 9th May, we had said, "Bears stamp their authority", and the Nifty again lost another 25 valuable points in a whipsawing trading session that saw a high of 5017 and a low of 4956. On that day, it became clear that Bulls were not able to sustain any rallies, and that the Bears were really stamping their authority by now.
On 10th May, we had suggested that "The Nosedive may resume", however, we got a pause on that day, when the Nifty after opening with a small gap up on the back of positive global cues, rallied about 50 points to 5040 and then slipped down below to 4950 before closing at 4966.
Then on 11th May, we saw that the supports were weakening, and suggested that to our readers of this blog. The Nifty on the last day of the week, the Nifty again opened with a gap down, rallied till the previous day's close, and then closed at the week's low levels.
Overall, we saw a bearish week, that has left many a traders wondering, what are the clues for the next week. We try to unravel this mystery in the following technical analysis.
1) The Elder Ray readings : On the weekly basis, the Bull Power has reduced from +56 to -56 whereas the Bear Power has increased from -153 to -275, indicating that as the Bulls have just come into the negative there could be some more downward move possible, while the Bears are gaining momentum. For the next week, the Bulls need to overcome 5145 to return back to their safe zone, whereas the Bears need to breach 4860 to maintain their downward momentum.
2) On a weekly basis, the Nifty is trading below all its key EMAs and below its 50 and 100 DMAs. It is however, trading above its 200DMA which is currently at 4815. This could be a support level, the market can look forward to.
3) In the above chart, the volumes have increased in the last week's fall on the Nifty, indicating sustenance of the down move. The weekly MACD is still in the positive, but has started falling off, indicating that a major down side can start from here on. The ADX too, is suggesting of a nascent trend forming and gaining momentum in the downward direction.
4) Overall, all the indicators are threatening of another set of lower levels to be seen on the Nifty in the coming week. However, strong support can emerge around 4800 with strong resistance to any up move at 5070 levels.
5) Considering the above, our trading plan for the week is as under.
a) Below 4910, we will open fresh short positions with a SL of 4950 and a target of 4810.
b) Above 4955, we will open fresh long positions with a SL of 4925 and a target of 5055.
c) Around 5055, we will open fresh short positions with a SL of 5075 and targets of 4910, 4855 and 4810.
d) Around 4810, we will open fresh long positions with a SL of 4780 and targets of 4910, 4955 and 5055.
Happy Trading !!!
For cash market recommendations see our Daily Pre Market calls on NSE
Let us start with the week gone by.
On 7th May we said, the "Nosedive starts", the Nifty opened lower with a down gap of almost 70 points, went lower, and then rallied on the news of GAAR clarifications. Although the Bulls never were able to 200 DMA levels and the Nifty closed at 5114 with a gain of a mere 27 points.
On 8th May, we reiterated our reading and suggested, "The trend is still downwards" , the Nifty opened flat at 5115, and then nosedived straight to 4984 before closing at 5000. That day, the Nifty not only gave up all the gains of the previous trading session, but lost more by closing a whopping 114 points down.
On 9th May, we had said, "Bears stamp their authority", and the Nifty again lost another 25 valuable points in a whipsawing trading session that saw a high of 5017 and a low of 4956. On that day, it became clear that Bulls were not able to sustain any rallies, and that the Bears were really stamping their authority by now.
On 10th May, we had suggested that "The Nosedive may resume", however, we got a pause on that day, when the Nifty after opening with a small gap up on the back of positive global cues, rallied about 50 points to 5040 and then slipped down below to 4950 before closing at 4966.
Then on 11th May, we saw that the supports were weakening, and suggested that to our readers of this blog. The Nifty on the last day of the week, the Nifty again opened with a gap down, rallied till the previous day's close, and then closed at the week's low levels.
Overall, we saw a bearish week, that has left many a traders wondering, what are the clues for the next week. We try to unravel this mystery in the following technical analysis.
1) The Elder Ray readings : On the weekly basis, the Bull Power has reduced from +56 to -56 whereas the Bear Power has increased from -153 to -275, indicating that as the Bulls have just come into the negative there could be some more downward move possible, while the Bears are gaining momentum. For the next week, the Bulls need to overcome 5145 to return back to their safe zone, whereas the Bears need to breach 4860 to maintain their downward momentum.
2) On a weekly basis, the Nifty is trading below all its key EMAs and below its 50 and 100 DMAs. It is however, trading above its 200DMA which is currently at 4815. This could be a support level, the market can look forward to.
3) In the above chart, the volumes have increased in the last week's fall on the Nifty, indicating sustenance of the down move. The weekly MACD is still in the positive, but has started falling off, indicating that a major down side can start from here on. The ADX too, is suggesting of a nascent trend forming and gaining momentum in the downward direction.
4) Overall, all the indicators are threatening of another set of lower levels to be seen on the Nifty in the coming week. However, strong support can emerge around 4800 with strong resistance to any up move at 5070 levels.
5) Considering the above, our trading plan for the week is as under.
a) Below 4910, we will open fresh short positions with a SL of 4950 and a target of 4810.
b) Above 4955, we will open fresh long positions with a SL of 4925 and a target of 5055.
c) Around 5055, we will open fresh short positions with a SL of 5075 and targets of 4910, 4855 and 4810.
d) Around 4810, we will open fresh long positions with a SL of 4780 and targets of 4910, 4955 and 5055.
Happy Trading !!!
For cash market recommendations see our Daily Pre Market calls on NSE
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