NIFTY FUTURE WEEK ENDED 26.11.2010
NIFTY FUTURE:
Yesterday, we had a 3rd down week, which closed near the low of the week. While it may be too early to confirm the down move will lead to the formation of the Right Shoulder (shown in Green on the chart) which I have been indicating on the weekly chart for some time now, but I am sure the hard core bull will also now factor that as a distinct possibility.
The past week saw a big range of 300 points (high of 6027 and low of 5727) amidst high level of volatility particularly yesterday, when Nifty Future saw a sharp bounce of 100 points from a low of 5727, but by the end of the day it closed near the low of the week.
Another indication of the weakness in Nifty Future is that the weekly candle has closed below the Andrew's Pitchfork on the weekly chart. The hope for the bounce came from the 0.382 level and trend line support around 5725 level.
If Nifty Future breaks the level of 5725 next week, the next strong support level is 5500-5550. Considering a weak close, this possibility can not be ruled out.
We are now just 2 trading days away from the monthly close. Even assuming the best case scenario of closing nearer to 6000 levels, we will still not have a monthly candle that would suggest continuation of Bull Run in the immediate future.
In view of the persistent fall for the past 3 weeks, are we likely to really see the levels of 4400 for making of a Right Shoulder that I have been visualising? While it may have started as a fragment of my imagination, but the way the events have unfolded over the past one week, it does give an impression that it can turn out as a reality. All we need now is some event internationally which forces FII's to be consistent sellers - don't miss to see the possibility of inverted flag on the DOW EOD chart uploaded today. If Nifty Future remains below 5500 I would consider that probability to be much higher. This scenario get negated if once again we start trading above 6100. I am sure those following TP Grid will catch the turns without involving the risk of wrong judgement.
For those who are statistically oriented and are following TP Grid - at the close of last week, we had 24 scrips (out of Nifty Fifty) trading below the mid point of 52 Week Hi and Lo. As the market gets lower, this number will increase. So don't be complacent, add an unbiased statistical tool to your analysis that helps you to remain on the right side of the market - irrespective what experts have to tell you in the media.
Have a nice weekend and keep learning.
Ketan Asher.
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