Nifty - 28 May 2014 - Bulls losing momentum

Bulls protect previous day lows, but could not take out previous day's highs either.

As discussed yesterday, it was "Bullish yet turbulent" on the Nifty all through the trading session yesterday. The Nifty opened positive with a gap up of 4 points at 7363 and made a quick high of 7373 from where there was all round profit booking and the Nifty slipped below 7310 within the first few minutes of trade. A rebound attempt from thereon got thwarted around 7345 and the Nifty then slipped back to below 7300 and made a low of 7275 before the afternoon. That low got tested a couple of more times during the day and Bulls were able to hold that lows. The Nifty finally closed at 7318 making into what is known as a inside day, a consolidation indication.

1) The Elder Ray readings : Bull Power reduces from +340 to +187 Bear Power rises from +105 to +89 indicating that though the Bulls are losing momentum, the Bears are yet to make most out of this opportunity. For today, the Bulls need to overcome the levels of 7395 to maintain their upwards momentum whereas the Bears need to breach the levels of 7205 to regain their lost grounds.

2) The stochastics keep on hovering just below the overbought zone and pointing flat.

3) The Nifty continues to close above all its key EMAs and also above all its key DMAs.

 

4) In the above chart, the volumes have decreased with the fall in the Nifty indicating that the fall may get arrested. The MACD is indicating a topping out but has not triggered a Sell as yet, with the histogram remaining positive but getting smaller. The ADX is also suggesting a loss of momentum for the Bulls but is still favoring the Bulls. The Parabolic SAR continues with its Buy signal with the SL now brought up to 7124 from 7086 yesterday.

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

a) Around 7230 we will open fresh long positions with a SL of 7200 and a target of 7390. We will add to these long positions only above 7430.

b) Around 7405 we will open fresh short positions with a SL of 7430 and a target of 7245. We will add to these short positions only below 7200.

Happy Trading !!! 

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