Nifty forms yet another evening star. A bearish assertion can take down Nifty swiftly.
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In our yesterday's post "Markets poised at a crucial juncture", we had suggested the importance of EOD close. We had also suggested that both sides have equal stake at present. And that is how the day unfolded. The Nifty opened with a negative gap down of 17 points at 6187 and barely filled that gap. The Nifty traded within a range of 25 to 30 points for most of the trading session, but kept of testing the lows without really threatening the highs. In the last hour of trade, the Nifty then plunged to its low of 6107 before closing at 6123 with a loss of 80 points. We did not take any trade yesterday because of hazy technicals waiting to resolve themselves.
1) The Elder Ray readings : Bull Power reduces from +71 to +65 Bear Power rises from +38 to -32 indicating that despite the plunge, the Bears need to keep up their tempo as the Bulls cannot be ruled out as yet. For today, the Bulls need to overcome the levels of 6205 to maintain their upwards momentum whereas the Bears need to breach the levels of 6100 to maintain their downwards momentum.
2) The stochastics are in the neutral zone and are pointing across each other.
3) The Nifty has closed below all its key EMAs but has closed above all its key DMAs.
4) In the above chart, the volumes have increased with the fall in the Nifty indicating that the fall may continue. The MACD continues to point downwards with the histogram remaining in the negative. The ADX is suggesting a rise in the Bearish momentum, but a reduction in the overall momentum. The Parabolic SAR continues with its sell signal with the SL now shifted down to 6212.
5) Considering the above, our trading plan for the day is as under.
a) Around 6175 we will open fresh short positions with a SL of 6195 and a target of 6080. We will add to these short positions only below 6060.
b) Around 6075 we will open fresh long positions with a SL of 6060 and a target of 6155. We will add to these long positions only above 6195.
Happy Trading !!!
Also visit Just Nifty and the Nifty Range blogs.
For cash market recommendations see our Daily Pre Market calls on NSE
Part (b) of trading plan(a) has triggered and have opened fresh short position at 6058 with a SL of 6088
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