Daily Market Trend Guide -- Monday, August 12, 2013

Daily Market Trend Guide – Special Edition

Next few Trading Days to decide immediate Trend of Markets.                                              Monday, 12 August 2013

After creating a top of 6338 on Nov. 5th 2010, the Market started its Downward Sloping Channel with intermittent   up moves giving downward sloping tops. This  Downward Sloping  Channel ended on  Dec 20 2011 with low of 4531 Nifty 

Thereafter, the Market witnessed a Major Trend Reversal and went on to registered a  sharp up move,  and got into the pattern of Upward Rising Channel from Dec. 20 2011. The Market remained in this  almost thirteen months long term upward trend till May 20 2013, the day on  which the Market gave , what in Technical Analysis is called, Inadequate Rise.

The Market remained in Long Term Upward Channel and thereafter gave, what in Technical Analysis is called, Inadequate Rise. The present and the past few month’s Market condition has emerged from this Technical event of Inadequate Rise

The present and the past few month’s Market condition has emerged from this Technical event of Inadequate Rise  and the market condition that we are experiencing since  May 2013 is the result of this Inadequate Rise.  The Market weakened sharply in last few trading days, as, in its downward journey, it went on to breach the Long Term Rising Trend Line.
 

Is the end of this downtrend in sight ?    What would be immediate trend of the Market ? What should be your Nifty Trading Strategy in coming days ?

 Long Term Technical Analysis of  Nifty, and detailed Technical Analysis of past three months give accurate answers to these questions.

While the Long Term Technical Analysis of Nifty has already been discussed above,  the detailed Technical Analysis of Nifty of past three months clearly indicates that after giving Inadequate  Rise on May 20 2013  and breaching  Long Term Upward  Rising Trend Line, the market has  reached it two major supports on the charts.

The first major support level is in the range of 5532 – 5448. This is the Gap created  between Nifty values on 13 Sept and 14 Sept 2012. Such upward Gaps are strong supports during downward journey of markets.

The another major technical support is in the Support Line of a technical  formation called Rectangle Formation. The Market has entered into this Formation since 28 May 2013 and had now reached its lower support line .

Translating this technical analysis  into Accurate Nifty levels,  it is very clear  from the charts that Nifty will have some support in the range of 5532- 5448 and 5490.  Closely watch these levels for strong support in coming trading days.

Candle chart of Nifty also  indicates that An engulfing bullish line occurred (where a white candle's real body completely contains the previous black candle's real body).  The engulfing bullish pattern is bullish during a downtrend which is  the case with NIFTY.  It then signifies that the momentum may be shifting from the bears to the bulls.

Very Important  Indicator RSI  has  just crossed above 30 from a bottoming formation.  This is a bullish sign.  A buy or sell signal is generated when the RSI moves out of an overbought/oversold area.  The last signal was a Buy  generated on Aug 08, 2013.

Another important technical formation on the Charts of Nifty is that after being into upward trend since long, the Nifty has got into Rectangle formation and not into downward sloping channel. This is another  positive  long term development for Nifty and the Markets.

Market is very near to its very important support levels of the range of 5532- 5448 and 5490  The  next few trading sessions are very crucial for the market and will be a decider for the immediate trend of the market.

Conclusion:    From the detailed Technical  Analysis of Nifty, it can be safely concluded, at least for the time being, that Market is very near to its very important support levels of the range of 5532- 5448 and 5490 and also Candles have indicated a reversal and  important Indicator RSI has given a buy signal .  There are technical chances of present downtrend getting arrested at supports of the range of 5532- 5448 and 5490. Only if these important supports are breached, Nifty will once again enter into fresh downtrend.  The  next few trading sessions are very crucial for the market and will be a decider for the immediate trend of the market.
 

Nifty Trading Strategy :    Take Long Position in Nifty above  Nifty Levels of  5532- 5448 and 5490. Put a very strict Stop Loss at these levels and reverse the trade if Nifty breaches these levels.

MilanVaishnav,                                                                                                Consulting Technical Analyst,                                                       www.MyMoneyPlant.co.in                                                                                                                             http://milan-vaishnav.blogspot.com                                                                                 +91-98250-16331 

milanvaishnav@mymoneyplant.co.in                                                                         milanvaishnav@yahoo.com