Nifty - 05 Jun 2014 - Waiting for direction

NR7 day formed on the Nifty, as markets consolidate and wait for further direction.

As discussed yesterday, it was a "Test of resistances" day on the Nifty. The Nifty which opened flat at 7418, traded for the entire session within a range of 42 points with a high of 7433 and a low of 7391, before closing at 7402 with a loss of 14 points against its previous close. A breakout from this squeezed range would provide further momentum to the Nifty. We did not trade in this narrow ranged trading session.

1) The Elder Ray readings : Bull Power reduces from +164 to +153 Bear Power also reduces from +82 to +111 indicating that the bias as of now is towards the Bulls. For today, the Bulls need to overcome the levels of 7455 to maintain their upwards momentum whereas the Bears need to breach the levels of 7300 to regain their lost grounds.

2) The stochastics continue to remain in the neutral zone and point horizontal.

3) The Nifty continues to close above all its key EMAs and also above all its key DMAs.

 

4) In the above chart, the volumes have remained stagnant with the Nifty being rangebound, indicating lack of conviction amongst the trading community. The MACD continues to hover at the top pointing horizontal, with the histogram remaining miniscule but above the zero line. The ADX is favoring the Bulls but is suggesting a minor loss of momentum for them. The Parabolic SAR continues with its Sell signal with the SL now brought down to 7537 from 7546.

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

a) Around 7485 we will open fresh short positions with a SL of 7505 and a target of 7340. We will add to these short positions only below 7295.

b) Around 7320 we will open fresh long positions with a SL of 7295 and a target of 7470. We will add to these long positions only above 7505.

Happy Trading !!! 

Buy calls on MAX JKLAKSHMI NFL DEEPIND FINCABLES & CERA hit their targets on 04 June 2014

Also visit Just Nifty and the Nifty Range blogs.


For cash market recommendations see our Daily Pre Market calls on NSE