Friday, July 11, 2008

The Nifty has a big move - It is Down!

On Thursday, I had suggested that the Nifty has a technical pattern that suggests a big move is coming. Today, Friday, that big move has come. The Nifty opened almost unchanged then fell steadily to go below 4115 to activate a sell order (see my previous post: The Nifty is ready for a big move). The Index made an intra day low of 4014 before a quick rally brought it to 4062 where it closed.
A Day trader who sold at 4115 would have made money. A position trader will be carrying his short position over the weekend. Chances are that the Position Trader will be able to catch a significant down trend since it does appear that the Nifty has started on its down move after a brief corrective rally.
The daily chart for the Nifty shows an upsloping flag. Such flags are made half way in a down trend. A rising flag comes in a down trend. The flag gets confirmed if the Nifty closes below 4000. The current leg of the down trend started at 4680, then touched a low of 3850, making a total move of 830 points. From the breakdown point at 4000, this gives a downside target of 3170. Now, a target is just an estimate, it may or may not come about.

I hope to add more posts over the weekend, so keep visiting.