Nifty - 12 May 2014 - Back to unchartered territory

Nifty wipes out 9 days losses in just 5 hours. Sets itself up for highest weekly gains.

As discussed on Friday, it turned out to be a crucial end of week with the Bulls taking back the control from the Bears. The Nifty opened with a negative gap down of 6 points at 6654 and remained subdued for the initial 30 minutes of trade. Around that time, the buying spree on the bourses started and the Nifty started to rise. Once the Nifty crossed 6715 (our identified resistance level) there was no looking back. In fact on the 15 minute chart, there was no red candle for the next 4 hours or so. The Nifty finally closed at 6859 after making a all time high of 6871. We took a trade on the long side at 6720 and booked out with a nice profit of 110 points on that trade.

1) The Elder Ray readings : Bull Power rises from -22 to +140 Bear Power also rises from -72 to -79 indicating that though the Bulls have the control, the Bears cannot be ruled out as yet. For today, the Bulls need to overcome the levels of 6895 to maintain their upwards momentum whereas the Bears need to breach the levels of 6655 to maintain their downwards momentum.

2) The fast stochastics have rushed towards the overbought zone with the slow stochastics just coming out of the oversold zone.

3) The Nifty has now closed above all its key EMAs and also above all its key DMAs.

4) In the above chart, the volumes have increased with the rise in the Nifty, indicating that the rise may continue. The MACD is attempting to point upwards with the histogram also rising but still it is in the negative. The ADX is suggesting a equilibrium amongst the Bulls and the Bears. The Parabolic SAR has now turned into a Buy signal with the initial SL at 6639.

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

a) Around 6810 we will open fresh long positions with a SL of 6790 and a target of 6900. We will add to these long positions only above 6925.

b) Around 6905 we will open fresh short positions with a SL of 6925 and a target of 6815. We will add to these short positions only below 6790.

Happy Trading !!! 

Buy call on FINCABLES hit its target of 09 May 2014

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