Nifty - 02 May 2014 - Volatile end of week

Nifty travels 123 points intraday increasing volatility. End of week may see more of it.

As discussed on Wednesday, Bulls needed to hold fort, which they did for most of the morning during the trading session, failed in the later part and recovered in the dying moments. The Nifty opened with a positive gap up of 10 points at 6725 and then saw a up move towards 6775 but got stopped at 6773 and then we saw some consolidation with the Nifty gyrating between 6760 and 6770. The Nifty briefly touched 6780 too, attempting a breakout. However, the Bears took over in the afternoon session and the Nifty plunged 120 points and more to make a intraday low of 6657, just above our identified breakdown point of 6655, and then in the dying moments of trade the Nifty recovered most of the losses to close at  6696 with a loss of 19 points. We lost 25 points in one trade and are holding another trade initiated at 6670 where we are in unrealized profit of 33 points.

1) The Elder Ray readings : Bull Power rises from +27 to +36 Bear Power also rises from -44 to -88 indicative of a rising volatility with the bias tilted towards the Bears. For today, the Bulls need to overcome the levels of 6780 to maintain their upwards momentum whereas the Bears need to breach the levels of 6645 to maintain their downwards momentum.

2) The stochastics are in the neutral zone and are pointing downwards, indicating room for a further down move.

3) The Nifty has now closed below all its key EMAs but has closed above all its key DMAs.

 

4) In the above chart, the volumes have increased with the volatility in the Nifty rising indicating of further volatile movements. The MACD continues to point downwards with the histogram growing in the negative. The ADX is showing a rise in the Bearish momentum but a fall in the overall momentum. The Parabolic SAR now turns into a Sell signal with the initial SL put at 6870.

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

a) Around 6755 we will open fresh short positions with a SL of 6775 and a target of 6660. We will add to these short positions only below 6630.

b) Around 6660 we will open fresh long positions with a SL of 6630 and a target of 6745. We will add to these long positions only above 6775.

Happy Trading !!! 

Buy call on TATASPONGE & Sell call on JUBLFOOD hit their targets on 30 Apr 2014

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