TURNING POINTS FOR WEEKENDED 10.12.2010

NIFTY FUTURE WEEKLY

NIFTY FUTURE:

During the last week, Nifty Future maintained downward bias after making weekly high of 6094 on Monday and weekly low of 5748 yesterday (range of 346 points or 5.8%). The good part is that the previous low of 5727 is not yet broken - thus giving hopes that the up move will continue as yesterday's low can be considered as a double bottom. The confusion remains whether yesterday's low is a end of the correction or signal for a deeper connection ?

With more evidence of weakness, it would not be out of place to view the last weeks' fall in light of the bigger picture - wherein I am showing a probable right shoulder on the weekly chart (in lime green colour) for a few weeks now. On this week's chart I have shown the 21 weeks on the 'Right Shoulder starting from the recent top of 6349. From this point if we take 21 weeks on the right (or in future) it comes to sometime in May 2011.

With the recent weakness, we can say that Nifty Future seems to be going as per the above "conjecture". However, I would like to caution you that in terms of probability %, if it was 10% when I started it when Nifty future was making new high, than we are now improved to about 25%. I would consider the probability to increase substantially to about 75% if Nifty Future decisively breaks 5500 - as there are multiple supports around this level. If 5500 is to be broken, I am sure some good reasons for it will also emerge for people to change their views.

To summarise, we need to close below 5725 to seek support around 5500-5550. Break and close below 5500 to see the 4400 levels as shown on the attached chart. On the higher side we have to face strong resistance at 5925 - 6000 and 6100.

Have a nice weekend!

Ketan Asher.