Tuesday, June 14, 2011

Why I suggested the momentum is up

On Monday afternoon, in ET-Now, I suggested that the trend short term is changing to up. Today (tuesday) morning before the markets open, on TV (ET-Now), I was convinced that the short term trend was up. Then, we had inflation data, with a lot of volatility. The Nifty closed higher, but just a bit higher.

Today, I thought I will share with you the reasons for this change of sentiment from down to up.

1. Acceptance of support. the Nifty fell to 5437 on Monday which was in the 5400-5450 support area. Prices almost immediately rebound from this area suggesting that this zone, for the time being is acting as support.

2. If 5450 is support, then where will the Nifty go? Towards 5600 which was resistance.

3. The Intermediate trend averages are moving up. The short term averages weere down, but they have come to touch the intermediate averages, which can provide support. This is a classic setup - short term averages decline to reach the rising intermediate averages which provide support. the uptrend resumes.

4. RSI3 is touching 20 suggesting an 'oversold' condition. The condition is relevant only when the trend is up, which seems to be so.

Any one of these factors is not enough to justify a bullish stance. But, together they provide the opportunity to develop a view.


vim said...

Dear sukhanisir,

As per the chart/stochaistics shown here :http://nifty.chart.tripod.com/

It looks like 100-min EMA(green) may cross down 400-min EMA tomorrow..Today it attempted and then it trailed along with each other..so does not this mean "uncertaininty" ..

What other technical parameters you observe that suggest bearish side momentum?

I actually moved out of Long position on Monday (ouch..:) ) in PowGri,HUL etc..seeing all bearish signals (fundamental,technical) and it seems market wants to tell us something else..where did one miss i.e. in technical analysis or strategy execution..

warm regards,
vimarsh p vasavada

rajesh said...

i m regulerly hearing u on ETNOW.
But this time i feel that u r not confirm to observe the momentom of nifty. when u told to LONG NIFTY, nifty going down, when u told u r bearish in nifty, NIFTY going bullish.

plz give a strong reading on nifty.

Rajesh Agarwal

vim said...

Dear rajesh,

I guess, Sukahanisir, did suggest following on monday/tuesday :
- overall trend is still bearish
- short term there seems to be a bullish trend till 5600..
- there are certain signals as he mentioned in this blog might hint towards bullish pattern but can not assure anyone..
- in fact ,he suggested to buy 5500 put/call as there was a clear lack of direction..and hence he suggested to play bi-directional strategy in nifty..
- today also he suggested that "bulls have given up but bears are yet to take charge".
- trade only after credit policy as market will be uncertain till then..

warm regards,
vimarsh p vasavada