As anticipated market did open with a gap and Nifty Futures ended the day at 3658. It should be noted that although market rose by 185 points the volumes were relatively lower.
Tomorrow market may face resistance @ 3750 region as there is a gap between 3758-3823 and also facing 50% retracement of the recent low and previous top as indicated in the Nifty Futures Chart attached. It would be better to avoid new buying at these levels and wait for correction.
One more reason for market making an intermediate top tomorrow: As per Ganns Seasonal Time Period - 5th May is 1/8th of the year commencing on 21st March.
In support of the above view, I have also attached Charts of Reliance and Infosys Futures which indicate of the impending hurdle that may be faced by these two index heavyweights. Reliance faces hurdle in 1925-50 region as shown in the chart, where as Infosys faces hurdle at 1700-10.
In light of the above it makes sense to book profit on long position or at least keep a tight trailing stop loss, as we have seen in the past that market is seldom sympathetic for not booking profits.
Do remember that non of the problems that brought market down (at international level) have been resolved but on the contrary has seen addition in the form of Swine flue epidemic. Moreover, at home - market is going up inspite of negative guidance from Infosys and not so good results from Reliance - but thats how markets move.
Happy Trading,
Ketan Asher.
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