Dear Friends,
Today I am presenting here my views on the long term of Nifty.
Please refer to the attached chart for your reference. I have drawn Only two trend lines and the two are speaking volumes. Now let me come to the point one by one :
* In my chart, I start a line joining the low of 25th April, 2003 and the low of 17th May 2004. On extending it, I get a nice Long Term Trend Line which had been holding for so long (The lower line).
* I draw another line above it - I chose low of 24th June 2004 (in fact I could also chose low of 21st July 2003) and low of 2nd May 2005 and extend the line. This also gives another very nice Not-So-Long Term trend line.
* On the upper line, Nifty took support and moved up on six occasions (1 to 6).
* Whenever Nifty failed to take support on the upper line, it fell and took support on the lower line - The Bigger Long Term Support Trend Line. As you can see, Nifty took support on this line on three occasions and it held, saving bulls always.
* Now look at the upper line, it was broken in start of March month this year and it took support on lower line in the same month. People were almost sure that Nifty has found a good bottom and a nice up move started which took Nifty to 5299 levels.
If you notice, this latest up move found resistance at the upper line and started falling from there. Now the last hopes of bulls were on the Bigger support of Lower Long Term Trend Line. But on 4th June, Nifty broke the ultimate Long Term support and is trading way below that.
Come on friends, this is not a small thing. Nifty has created a Historical Turnaround in Jan this year and has now confirmed that it is indeed a BEAR MARKET.
A picture is worth a thousand words...
Your Novice Analyst
Harish Dobhal
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