Nifty - 27 May 2014 - Bullish despite turbulence

Nifty shocks after attempting new highs, shakes out weak bulls yet stays Bullish.

As discussed yesterday, the "Expiry week" started on a bullish note as the Nifty opened with a huge 62 point gap up at 7429 and traded bullish for the entire morning session. During this period, the Nifty crossed our identified resistance zone around 7470 to make a high of 7504, just 60 points short of the all time high of 7564. However, in the afternoon session, the Nifty got top heavy and a sell off saw the Nifty plunge below our identified support zone around 7310 to make a low of 7269, from where, in the last hour of trade, the Nifty regained 90 points to close at 7359 with a loss of just 8 points from its previous close. To be frank, we did not dare to take up any trade in this volatile session, where any sort of stop losses got hit before one could blink.

1) The Elder Ray readings : Bull Power rises from +250 to +340 Bear Power also rises from +163 to +105 indicating that the Bears are recouping whilst the Bulls retain control over the Nifty. For today, the Bulls need to overcome the levels of 7540 to maintain their upwards momentum whereas the Bears need to breach the levels of 7195 to regain their lost grounds.

2) The stochastics continue to hover just below the overbought zone indicating room for an upwards move.

3) The Nifty keeps on closing above all its key EMAs and also above all its key DMAs.

 

4) In the above chart, the volumes have increased with the Nifty remaining stagnant indicating the implied volatility on the Nifty. The MACD continues to point upwards with the histogram remaining in the positive. The ADX continues to show a rise in the Bullish momentum. The Parabolic SAR continues with its Buy signal with the SL now brought up to 7086 from 7045.

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

a) Around 7250 we will open fresh long positions with a SL of 7225 and a target of 7400. We will add to these long positions only above 7475.

b) Around 7450 we will open fresh short positions with a SL of 7475 and a target of 7300. We will add to these short positions only below 7225.

c) We will not trade in case none of our trading plans get triggered.

Happy Trading !!! 

Buy calls on AMRUTANJAN DBREALTY CHENNPETRO UPL SGJHL NELCO AJMERA & UBHOLDINGS hit their targets on 26 May 2014

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