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Nifty Technical Trend Analysis-21June13

, June 24, 2013, 1 Comments

Number 3 is quite significant while studying the technical parameters within the frame of financial technical analysis, as Nifty has touched 6200 level briefly 3 times in the last 6 year period; Jan 2008, Oct 2010, May 2013.

Invest or Not to Invest: It can be recommended that the Positional traders should buy above 5620 with a stop loss at 5600/5595 and a target of 5700, 5738. On fall below 5590 positional trader may short with stop loss above 5605/5615 within a target of 5540, 5500.

It has been a roller coaster rider for Nifty as it went up faster touching 6214 (20th May 2013) and then took a nose dive reaching the 5617 on 21st June 2013. This topsy-turvy upward movement in Nifty can attributed to the massive inflow of FII’s money and the downward dive is due to fast depreciation of the Indian Rupee against the dollar which led to the outflow from bond & equity market.  One often notices that Indian Financial market is quite sensitive to Indian currency, gold imports as these things steer up the domestic crisis that has a wide far reaching impact on the equity market.

In equity markets while analyzing the Nifty daily chart. Technically an uptrend can be observed with the formation of ascending channel in daily chart of Nifty.

Daily candle/bar: The Friday candle of 21st June 2013 is small bullish star with Nifty closing at 5667. This bullish star like candle takes the support on the ascending channel at 5600 levels, hints that the current fall may take a breather here. It also represents probably a temporary stalemate between the buying forces and selling forces.

Nifty Daily Structure: The peak & trough analysis shows that within the ascending channel from the low of 4546 in Nifty in December 2011 an uptrend of higher peaks and higher troughs can be observed. The structure of higher tops & higher bottoms is a sign of bullish trend. Technically higher peaks are 5616, 5813, 6098 & 6214, while the Nifty troughs are 4546, 4783, 5033, 5216, 5500 & 5617. Ascending structure of Nifty prices between the boundaries of 2 parallel trend lines, confirms that the primary trend in Nifty daily time frame is still up.

Moving average: Nifty prices currently have gone below the 50 DMA & 200 DMA but this has often happened within this ascending channel, as Nifty tried & now tries to touch the (5600 level) support line or lower trend line of this ascending channel.

Technical Indicator: Slow Stochastic is below 20, in over sold zone. Bears have dominated the bulls during the fall. But this means a small bounce may happen, but no bullish divergence is observed as yet in the oversold zone.

Technical conclusion: Unless Nifty crosses over 200 DMA, any rally may not be sustainable in the longer term horizon. Nifty might attempt a pull back as long as Nifty takes support on the support line of the ascending channel around 5600,  a small bounce back till 5700, 5725 can be expected.

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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
  • aish joshi

    Nifty future October derivative traded negative taking weak cues from
    market. Open at 5846.00 touched high of 5854.85 and low of 5810.00
    last traded at 5818.50 low 1.18%.