Wednesday, July 2, 2008
Nifty Analysis based on Hourly and Daily Charts
Here is my today's (2nd July 2008) Nifty Analysis based on EOD chart. Today there was a run away kind of up move which is quite characteristic of BEAR MARKET RALLY. Before analyzing the chart, I want to give a word of caution for those who think the tide has turned. The reason is - such fierce and sharp up moves are very well known in Bear Markets. If it were a consolidated move, only then one could think about it.
Looking at daily chart, it looks Nifty today has taken support at Line 4, which is a Line I drew joining the high of 27th Feb and 28th March. By definition it qualifies to be a trend line merely on the basis that it got resisted again on 2nd April.
The immediate resistance comes at Line 6, which is the latest and steepest downtrend line. Looking for tomorrow, the level comes to around 4130-40. Amazingly, this is almost same as that presented on hourly chart.
If Nifty ANYHOW manages to cross this hurdle of 4120-50, then the next resistance comes at Line 3. This is the downtrend line which is comfortable in terms of steepness. The level for that tom is about 4430 thereabout.
Now, let me come to Fibo retracements. If we go by larger downtrend and take the 20th May high and Today's low, then the 38.2% retracement comes at 4354. Taking the nearer downtrend in consideration, the high of 18th Jun and Today's low, the 61.8% retracement comes to 4354 again!!! What a coincidence !!! The 38.2% of this smaller downswing is at 4161. Taking the nearest downswing, High of 26th June and Today's low, the 61.8% retracement comes at 4143, again quite near the 4161 number !!!
So, going by this, the resistance for Nifty are at 4143 - 61 and 4354.
THE HOURLY CHART
I have drawn two trend lines Line 1 and Line 2. As we can see Line 1 is the current resistance line and Line 2 is the previous resistance line, which, after breaking has acted as support yesterday and today.
So, going by it, the resistance on hourly chart is at about 4120 area. Breaking it will be a signal for further upmove. Also, the 61.8% retracement of latest downswing is at 4141. So going by it, 4120 to 4150 can be good resistance for Nifty.
I conclude today's analysis here with the hope that you will reply with your valuable comments.
Thanks & Best Regards