Sunday, July 20, 2008
Nifty Daily and Weekly Analysis as on 20th July
After pondering over some fundamental questions let us return to the Technicals again. Today I am posting the Daily and Weekly charts of Nifty.
Looking at the Nifty Daily chart the triangle breakout that happened on 14th July has still not given its target, which comes around 3600. After falling to 3790 on 16th, it showed two days of strong up move in sync with global markets. The first day of this upmove was not that good considering volume etc but the second day (Friday) the move looks better as the volume was higher. However, it closed on Line 4 which can be the most recent resistance line. If Nifty manages to sustain above Line 4 then the next resistance will be Line 3, for tomorrow it is crossing the previous channel support line (See lower Arrow). There somewhere is also the 34 Day EMA. So the area around 4200 - 50 will be big resistance for Nifty tomorrow (But first it has to sustain above Line 4).
The bigger resistance areas are on Line 1 and Line 2 (the upper arrow), which look too far to think now.
THE WEEKLY CHART:
Looking at the weekly chart of Nifty, The thing to notice is a hammer. The hammer low (3790) on Nifty should act a good support. However, the volume is not convincing and for the past two weeks (which are green candle) the volume is actually lower, which is indicating a mere correction in the larger downtrend.
Conclusion: The charts are not telling a clear direction as of now, however, the bias remains on the downside. If the above mentioned resistance areas are cleared, only then one should start looking for initiating long position.
Disclaimer: Same as past one.