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Nifty Technical Trend Analysis

, January 25, 2013, 0 Comments

Nifty is making new highs every week and touched a yearly high of 6101 on 22nd January 2013. In nifty daily chart one can observe many trend lines from left to right. On the left hand side of the nifty daily chart a descending channel can be observed, nifty prices went out and made a subsequent lower lows of 4814, 4714, 4546. Technically nifty bottomed out at 4546 and heralded a new rally by breaking out of descending channel at 5124, while additionally KST indicator also gave a breakout on the up-side into the overbought zone.

Nifty retested the crucial support at 4783 on the descending trend line. Then nifty never looked back & started an uptrend by making higher highs at 5300, 5450, 5813 now 6099 on 22nd January 2013. The nifty high of 6101-6099 is touching the uptrend line while joining the old higher highs of 5336, 5616.

A well modulated uptrend consists of higher highs and lower lows which can be observed at 5033, 5216 and 5560. These lower lows (5033, 5216 & 5560) are a crucial nifty support points on an uptrend line. The moving averages 13ema, 34ema, 50 sma & 100sma can be observed lending support to current daily nifty price action along with volume which is rising along with the uptrend. A good sign that bulls are heavily participating in this rally.

The momentum indicator KST is showing negative divergence in the overbought zone, which indicate rally may slow down or is losing steam. The buying interest though still held by bulls. But bears may spring a surprise on unsuspecting bulls & could be waiting on the sidelines to hamper the rally.

Technical Conclusion: Though most technical finding indicates bullish environment, but the rally looks tired and building of negative divergence should be heeded. The market may take a rest for sectoral churn.

Invest or not to invest: A positional nifty short trade can be generated if an uptrend line of 6099 is not crossed on the upside and if nifty cracks down then on support on uptrend line new nifty future long position can be initiated with strict stop loss. Again new positional trade in nifty future can be initiated on KST Indicator touching the zero line & giving crossover in overbought zone.

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About author
Suchita holds a Bachelor of Science Degree from MSU University, Baroda, Diploma in Financial Management from Xavier's Institute of Management, Mumbai and has undergone Comprehensive Program on Technicals Analysis from Bombay stock exchange. ...more