Nifty - 03 Jun 2014 - Bulls are back

On the eve of RBI monetary policy, Bulls regain their advantage. Volatility may rise.

On 30th May, we had suggested that the Nifty was "Sniffing downwards", and the Nifty which opened with a 20 point positive gap up at 7255 went down in a freak trade at 7118 and recovered from there to close at 7230 with a loss of 6 points. After five consecutive sessions of losses, we were expecting some green yesterday, and the Bulls obliged. The Nifty opened with a positive gap of 34 points, filled the gap in the first 15 minutes of trade and then kept on rising for the entire trading session closing near the highs of the day. We could not update our views on this blog as we were traveling, neither did we trade.

1) The Elder Ray readings : Bull Power rises from +59 to +134 Bear Power reduces from -95 to +5 indicating that the Bears have not been able to sustain in their safe zone even for a day. For today, the Bulls need to overcome the levels of 7390 to maintain their upwards momentum whereas the Bears need to breach the levels of 7255 to regain their lost grounds.

2) The stochastics are in the neutral zone and are pointing upwards.

3) The Nifty has closed now above all its key EMAs and also above all its key DMAs.

4) In the above chart the volumes have decreased with the rise in the Nifty indicating that the rise may find resistance going ahead. The MACD is giving mixed signals of attempting a rise yet pointing downwards with the histogram too diminishing but remaining above the zero line. The ADX too is suggesting a whipsaw with the overall momentum coming down. The Parabolic SAR continues with its Sell Signal with the SL brought down from 7564 to 7555.

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

a) Around 7445 we will open fresh short positions with a SL of 7470 and a target of 7300. We will add to these short positions only below 7255.

b) Around 7280 we will open fresh long positions with a SL of 7255 and a target of 7430. We will add to these long positions only above 7470.

Happy Trading !!!

Buy call on ABAN hit its target of 02 Jun 2014

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