Saturday, July 26, 2008

Nifty Daily and Weekly analysis as on 26th July 2008

Dear Friends,

Here I am presenting my analysis of Nifty on the basis of weekly and daily charts of 25th July.

First, the Daily Chart:

Nifty showed a good upmove this week but found resistance at the crossing of Line 2 and Line 3, just as I had posted in my previous post. The things to sum up are:
1. Nifty showed a spectacular up move but it looked more like a vertical one than a consolidated approach.

2. It came down in last two days, but still it took support above 34 Day EMA and 38.2% retracement of the upmove.

3. The volumes of two down days are lower but we should remember that markets can fall with their weight.

4. Both FIIs and DIIs are net sellers on last day (25th July)

Looking on the weekly chart, we can see a good green candle with good volume. The long shadow above the real body of the candle is not good for bulls.

Conclusion: For short term traders, the support at 34 Day EMA should hold, but if it breaks down below that, there can be good downside again as the next supports are way too low. If it goes up near this week's high, one can go short with Stop Loss at 4650 on closing basis (Nifty Spot).
In my opinion, this is just a counter trend / bear market rally and no investing can be advised as long as the Main Downtrend Line - Line 1 holds.


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