Nifty - 06 Jun 2014 - EOW may be Bullish

Bulls show the way forward, need a close today above 6505, better still above 6565.

As discussed yesterday, the Nifty which was "Waiting for direction", mimicked a false signal of going down in the opening trades, but found support at the 8EMA and bounced back to give a all time high close. The Nifty opened with a mild negative gap down of 3 points at 7400 and traded bearishly in the first 45 minutes of trade, making a low of 7361, where it found support and bounced back furiously, with two minor draw-downs, to make a high of 7485 before closing at 7474 with a gain of 72 points over its previous close. Now, today being a EOW session, the Bulls need to close the Nifty in the positive to negate the Bearish Engulf formed last week on the weekly charts. We need to watch out for that.

1) The Elder Ray readings : Bull Power rises from +153 to +176 Bear Power also rises from +111 to +52 indicating that the Bulls are strong as of now. For today, the Bulls need to overcome the levels of 7515 to maintain their upwards momentum whereas the Bears need to breach the levels of 7340 to regain their lost grounds.

2) The stochastics are approaching the overbought zone but are not quite there yet.

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 increased with the rise in the Nifty indicating that the up move may continue as of now. The MACD continues to float around the top with the histogram now rising in the positive. The ADX is also favoring the Bulls. The Parabolic SAR however, continues with its Sell signal with the SL now brought down to 7529 from 7546.

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

a) Around 7430 we will open fresh long positions with a SL of 7405 and a target of 7510. We will add to these long positions only above 7560.

b) Around 7535 we will open fresh short positions with a SL of 7560 and a target of 7445. We will add to these short positions only below 7405.

Happy Trading !!! 

Buy calls on LLOYDELENG PSB & DLINKINDIA hit their targets on 05 June 2014

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