Nifty - 28 Apr 2014 - Test of rising support lines

Post a prolonged upmove, Bulls turn to profit booking. Nifty ready to test supports.

As discussed on Friday, "Bulls maintained their advantage" but for a very short time and that too in the opening few minutes of trade. The Nifty opened at 6856 with a positive gap up of 15 points and rushed to make a high of 6870 (our identified resistance level) and then got sold off to breach 6820 within the first hour of trade. The Nifty then traded between 6845 and 6820 for another couple of hours or so. After mid afternoon, the downmove accelerated and the Nifty breached 6800 and traded between 6780 and 6795 for the rest of the trading session, breaching the day lows twice. The Nifty made a intraday low of 6773 before closing at 6783 with a loss of 58 points against its previous close.

1) The Elder Ray readings : Bull Power rises from +108 to +112 Bear Power also rises from +67 to +15 indicating that the Bears have now recovered a lot but the Bulls still hold the key to the Nifty. For today, the Bulls need to overcome the levels of 6875 to maintain their upward momentum whereas the Bears need to breach the levels of 6760 to regain their lost grounds.

2) The stochastics have moved out of the overbought zone and are pointing downwards.

3) The Nifty has now closed below its 8EMA(6784) but has closed above its 13EMA and 21EMA. The Nifty has also closed above all its key DMAs.

 

4) In the above chart, the volumes have dipped with the fall in the Nifty indicating that the fall may get arrested soon. The MACD has given a Sell signal with the histogram also growing in the negative. The ADX is showing a fall in the Bullish momentum and a rise in the Bearish momentum, but is still favoring the Bulls. The Parabolic SAR continues with its Buy signal with the SL now shifted up to 6688.

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

a) Around 6820 we will open fresh short positions with a SL of 6840 and a target of 6750. We will add to these short positions only below 6720.

b) Around 6740 we will open fresh long positions with a SL of 6720 and a target of 6810. We will add to these long positions only above 6840.

Happy Trading !!!


Buy calls on SHASUNPHAR TWL DHFL & Sell call on ULTRACEMCO hit their targets on 25 Apr 2014

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