NIFTY FUTURE WEEKLY:
What a week it was! The intra day volatility was something never seen in the recent times. The range this week was 287 points - marginally lower than previous weeks' 319 points.
The past two week's fall has engulfed the rise that started in 1st week of Sept '10 - in simpler words, 4 months (16 weeks) rise wiped out in just two weeks. Just blame it on Newton's Law.
The past two week's fall has engulfed the rise that started in 1st week of Sept '10 - in simpler words, 4 months (16 weeks) rise wiped out in just two weeks. Just blame it on Newton's Law.
With the Friday's fall to 5638, we are now close to the various important support levels - with closest being 5613 which is 200 DMA. Moreover, we have 5567 being the midpoint of the previous swing as well as the trend line connecting two previous tops (both shown on the chart).
Considering divergence on the EOD chart and Stochastic being oversold, I expect one of the above supports to hold for a smart pull back which can take us to test the Trend Line (in brown colour) which comes to around 6000 levels. If this materialises as expected, it could give a good trading opportunity of about 500 points. Nifty Future will show strength above 5850.
Similarly, for Bank Nifty Future (which has taken more beating) it should find support around 10300 and hence a good opportunity to go long with stop loss of 10200. It will show strength above 10750.
Considering the volatility, it is advisable to trade in Options so that the risk gets limited, even if one forgets/ignores to use STOP LOSS.
For those who have not been able to fly kites yesterday due to volatile markets can do so over the weekend and have a good time!
Ketan Asher.
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