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Wednesday, 13 June 2012

Nifty - 13 June 2012 - Buy on dips continues

Bulls manage to break Nifty out of the declining channel. We look to buy on dips.

As discussed yesterday in our post "Volatility continues", we saw the Nifty open with a down gap and then trade above that level for the entire day, and by close recover all the losses of the previous day. We had also suggested, that the "Bulls still hold the sway" and that "the Bulls still look good and may succeed in arresting this fall, if not staging a smart comeback." Today, given the global cues, the Nifty may open with a positive gap, and once it goes above 5140, we could see the rally continue.

1) The Elder Ray readings : Bull Power reduces from +152 to +136 Bear Power increases from +68 to +22, indicating that the Bulls have actually lost some momentum, but the bears are still in the opponents territory. For today, the Bulls need to overcome 5145 to maintain their upwards momentum, whereas the Bears need to breach the Nifty below 5010 to regain their lost grounds.

2) The Nifty is now trading above all its key EMAs and is also above its 50 DMA and 200 DMA. The 100 DMA which is at 5196, could be the point of resistance.

3) The stochastics are well and deeply into the overbought zone now.


4) In the above chart, the volumes have dipped in yesterday's fall, indicating loss of momentum for the rally. The MACD is now rising merrily, indicating support to the up-move. The ADX is suggesting some loss of momentum to the rally. The Parabolic SAR continues with its Buy signal.

5) Considering the above, our trading plan for the day is as under.

a) Around 5080, we will open fresh long positions with a SL of 5050 and a target of 5150. We will add to these long positions only above 5180.

b) Around 5170, we will open fresh short positions with a SL of 5180 and a target of 5100. We will add to these short positions only below 5050. 

Happy Trading !!! 

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