Nifty - 09 Jul 2014 - Drop from the top

Nifty makes a new high and drops from the top. Bears get a look in, but need more.

As discussed yesterday, the Nifty stalled, but looked positive at the start of the trading session and remained so for the first hour of trade. The Nifty opened with a positive gap up of 17 points at 7804 and made a quick high of 7809 within the first few minutes of trade. However, the Nifty could not manage to sustain at those high levels and slipped to our identified support zone of 7745, from where a recovery was attempted but failed again. The Nifty then slipped below our identified key support of 7720 and then dropped almost vertically not even attempting a recovery. The Nifty made a low of 7596 before closing at 7623 with a loss of a whopping 164 points over its previous close. We took a trade on the long side at 7745 and booked out with a profit of 25 points.

1) The Elder Ray readings : Bull Power rises from +150 to +169 Bear Power also rises from +113 to -44 indicating that the Bears have now regained their lost grounds but need to keep the momentum with them as yet. For today, the Bulls need to overcome the levels of 7805 to maintain their upwards momentum whereas the Bears need to breach the levels of 7590 to maintain their downwards momentum.

2) The stochastics are back to the neutral zone and are pointing downwards.

3) The Nifty has now closed below its 8EMA(7671) and 13EMA(7640) but has closed above its 21EMA(7586) and has also 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 can continue. The MACD is now pointing horizontal with the histogram being just below the zero line. The ADX is suggesting a fall in the Bullish momentum but is still favoring the Bulls. The Parabolic SAR has now turned into a Sell signal with the initial SL put at 7809.

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

a) Around 7715 we will open fresh short positions with a SL of 7740 and a target of 7615. We will add to these short positions only below 7585.

b) Around 7605 we will open fresh long positions with a SL of 7585 and a target of 7705. We will add to these long positions only above 7740.

Happy Trading !!! 

Buy call on KITEX hit its target on 08 Jul 2014

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