In last week's report, we had evinced the possibility of Nifty falling to around 5220 where the trend line
adjoining 4675 and 4786, the bottoms made in February and May 2010 respectively, was presenting a
support. It did not take longer for the benchmark to touch that level as on Monday itself Nifty plunged
to make an intraday low of 5196 and closed at 5258, losing 2%. The benchmark consolidated on
Tuesday and Wednesday, followed by a modest 0.8% up move on Thursday. Friday brought an
unexpected rise as Nifty climbed a whopping 2.8%, the biggest gain since 1st March, 2011, which
helped the benchmark not only erase all the weekly losses but end the week with a respectable 2%
gain, the highest weekly gain in nearly 3 months.
Friday's rise was truly spectacular and unexpected as 5352, 5400 and 5449, the 38.2%, 50% and
61.8% retracement levels of the 5605-5196 fall were all taken out in one go. Also, Nifty decisively
crossed and closed above 20 and 34 day moving averages. Does this turn the view decisively bullish?
Not yet. As we have been mentioning, a resumption of the higher-top higher-bottom on the daily chart
is the prime requirement to turn the near term view decisively bullish and we are yet to see that. The
first requirement of a higher-top will get fulfilled if Nifty crosses 5520, the top made on 14th June as
shown in the daily chart below, which will then have to be followed up by a higher-bottom. Beyond
5520, Nifty would find a tough resistance around 5605. On the downside, the 5343-5330 gap, created
by the gap up opening on Friday, is likely to act as a support. Traders are advised to book profit in
trading longs as Nifty approaches 5520 and wait for the resumption of higher-top higher-bottom
formation before taking fresh long positions.
adjoining 4675 and 4786, the bottoms made in February and May 2010 respectively, was presenting a
support. It did not take longer for the benchmark to touch that level as on Monday itself Nifty plunged
to make an intraday low of 5196 and closed at 5258, losing 2%. The benchmark consolidated on
Tuesday and Wednesday, followed by a modest 0.8% up move on Thursday. Friday brought an
unexpected rise as Nifty climbed a whopping 2.8%, the biggest gain since 1st March, 2011, which
helped the benchmark not only erase all the weekly losses but end the week with a respectable 2%
gain, the highest weekly gain in nearly 3 months.
Friday's rise was truly spectacular and unexpected as 5352, 5400 and 5449, the 38.2%, 50% and
61.8% retracement levels of the 5605-5196 fall were all taken out in one go. Also, Nifty decisively
crossed and closed above 20 and 34 day moving averages. Does this turn the view decisively bullish?
Not yet. As we have been mentioning, a resumption of the higher-top higher-bottom on the daily chart
is the prime requirement to turn the near term view decisively bullish and we are yet to see that. The
first requirement of a higher-top will get fulfilled if Nifty crosses 5520, the top made on 14th June as
shown in the daily chart below, which will then have to be followed up by a higher-bottom. Beyond
5520, Nifty would find a tough resistance around 5605. On the downside, the 5343-5330 gap, created
by the gap up opening on Friday, is likely to act as a support. Traders are advised to book profit in
trading longs as Nifty approaches 5520 and wait for the resumption of higher-top higher-bottom
formation before taking fresh long positions.
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