Nifty - 14 Jul 2014 - Poised Bearishly

Nifty, at the start of week, is poised Bearishly, but is oversold. May see relief rally too.

As discussed on Friday, we saw a "Volatile end of week" on the bourses, with the Nifty, although after getting a positive gap up of 17 points at 7584 and having rallied till 7626 till noon, gave up all the gains and more by the closing. The Nifty made a low of 7447 before closing at 7460. There were a couple of attempts to recovery, but got deftly sold out at the nearest resistance point. We sat out of trade as decided and waited for the week to end for a clear signal.

1) The Elder Ray readings : Bull Power reduces from +109 to +27 Bear Power rises from -143 to -152 indicating that although the Bears have got a bit stronger, they are yet to dislodge the Bulls. For today, the Bulls need to overcome the levels of 7630 to maintain their upwards momentum whereas the Bears need to breach the levels of 7425 to maintain their downwards momentum.

2) The fast stochastics are well and deep into the oversold zone, with the slow stochastics lagging behind.

3) The Nifty continues to close below all its key EMAs but above all its key DMAs.

 

4) In the above chart, the volumes have decreased with the fall in the Nifty indicating that the fall may get arrested soon. The MACD continues to show downwards trend, with the histogram too falling in the negative. The ADX is showing a loss of momentum for the Bulls, but is still favoring the Bulls. The Parabolic SAR continues with its Sell signal with the SL now brought down to 7775.

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

a) Around 7520 we will open fresh short positions with a SL of 7540 and a target of 7405. We will add to these short positions only below 7375.

b) Around 7395 we will open fresh long positions with a SL of 7375 and a target of 7510. We will add to these long positions only above 7540.

Happy Trading !!! 

Also visit Just Nifty and the Nifty Range blogs.


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