Nifty - 30 May 2014 - Sniffing downwards

At end of month, Nifty is looking to fall away. Bearish engulf forming on the weekly.

Just on Wednesday we had suggested "Bulls losing momentum" and yesterday it was all "Expiry Jitters" on the bourses. The Nifty opened with a negative gap down of 13 points at 7317 and made a quick high of 7325 where the upward move had got thwarted on the earlier day too. Once the Nifty could not overcome this level, the Bears took charge and the Nifty slowly but surely started to slip. Once the levels of 6270 were breached, there was no looking back and the Nifty went on a spiraling fall. The fall got arrested in our identified support zone of 7240 7210 and the Nifty made a low of 7224 before closing at 7236. The Nifty has now entered the Sell on Rise mode.

1) The Elder Ray readings : Bull Power reduces from +138 to +115 Bear Power rises from +96 to +14 indicating that the Bears are nearing to regaining their safe zone. For today, the Bulls need to overcome the levels of 7330 to maintain their upwards momentum whereas the Bears need to breach the levels of 7215 to regain their lost grounds.

2) The stochastics are in the neutral zone and are pointing downwards.

3) The Nifty has closed below its 8EMA(7270) but has closed above its 13EMA(7210) and its 21EMA(7117). However, the Nifty 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 to threaten a Sell-off with the histogram diminishing in the positive. The ADX too is suggesting a rise in the Bearish momentum and a fall in the Bullish momentum. The Parabolic SAR continues with its Buy signal with the SL now brought up to 7192 from 7159.

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

a) Around 7315 we will open fresh short positions with a SL of 7345 and a target of 7160. We will add to these short positions only below 7130.

b) Around 7150 we will open fresh long positions with a SL of 7130 and a target of 7305. We will add to these long positions only above 7345.

Happy Trading !!! 

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