Nifty - 08 May 2014 - Testing triple bottom

Bears try to take control as Nifty tests 6650 for the third time, during this uptrend. 

As discussed yesterday, we were expecting "Listless grinding" on the Nifty as key averages would adjust with the time spent. However, the Nifty staying below the key pivot point of 6720, encouraged the Bears, who kept on making newer intraday lows and brought the Nifty to its key support levels around 6650 for the third time within a month of trading. The daily trend on the Nifty remains downwards, however, the weekly trend being upwards and stronger, may assert itself today or tomorrow and we need to be prepared for that. We took a trade on the long side yesterday, and booked a loss of 20 points as our SL got hit.

1) The Elder Ray readings : Bull Power reduces from +14 to 0 Bear Power rises from -28 to -76 indicating that the Bears are stronger, but have not dislodged the Bulls as yet. For today, the Bulls need to overcome the levels of 6725 to regain their upwards momentum whereas the Bears need to breach the levels of 6635 to maintain their downwards momentum.

2) The stochastics are now well into the oversold zone.

3) The Nifty has 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 fall in the Nifty indicating that the fall may continue. The MACD continues its plunge downwards, with the histogram too growing in the negative. The ADX is also suggesting a rise in the Bearish momentum. The Parabolic SAR continues with its Sell signal with the SL now brought down to 6853.

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

a) Around 6695 we will open fresh short positions with a SL of 6710 and a target of 6630. We will add to these short positions only below 6595.

b) Around 6615 we will open fresh long positions with a SL of 6595 and a target of 6680. We will add to these long positions only above 6710.

Happy Trading !!! 

Sell calls on ULTRACEMCO & INFY hit their targets on 07 May 2014

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