Nifty - 29 May 2014 - Expiry Jitters

Nifty threatens to turn volatile on expiry day by showing NR7 day on its eve.

As discussed yesterday, we saw "Bulls losing momentum" on the Nifty, although they did defend the 7300 level decisively, but they could not take out the 7350 level even. The Nifty opened with a positive gap up of 7 points at 7325 and then gyrated for the entire trading session within a narrow range of 42 points between 7303 on the lower side and 7345 on the higher side, before closing at 7330 with a gain of 12 points over the previous close. Thus, the Bulls although maintaining their advantage, are clearly losing on the momentum and need to pick up quickly now.

1) The Elder Ray readings : Bull Power reduces from +187 to +138 Bear Power also reduces from +89 to +96 indicating that the Bulls are still in control of the Nifty. For today, the Bulls need to overcome the levels of 7365 to maintain their upwards momentum whereas the Bears need to breach the levels of 7225 to regain their lost grounds.

2) The stochastics continue to hover just below the overbought zone and continue to point 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 increased with the rise in the Nifty indicating that the rise may continue. The MACD is indicating an attempt of a Sell signal but has not triggered it yet, while the histogram remains in the positive but keeps getting lower. The ADX is also suggesting loss of momentum for the Bulls but still favors them over the Bears. The Parabolic SAR continues with its Buy signal with the SL now brought up to 7159 from 7124.

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

a) Around 7240 we will open fresh long positions with a SL of 7215 and a target of 7405. We will add to these long positions only above 7445.

b) Around 7420 we will open fresh short positions with a SL of 7445 and a target of 7300. We will add to these short positions only below 7215.

Happy Trading !!! 

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