NIFTY FUTURE WEEKLY
We had one more week of narrow range - 139 points with high of 5537 and low of 5398. It closed at 5485 leaving a small lower shadow on the weekly candle. Though this will induce some hope to the bulls, but the same when seen in light of lower top / lower bottom leaves one sceptical about the strength of the market. Yesterday's expected up move found strong resistance at 5525 level that led to close at lower levels of 5485.
On the attached chart you will find that I have drawn a rectangle marking the most traded area for 46 weeks. We saw the market bounce from this level once earlier which took the market up to 6000 and now we are once again at the threshold of breaking this region when we start trading below 5300 levels. The reasons that could lead to the breaking of this strong support area this time are much more convincing (viz. Higher petrol prices, Higher Interest Rate etc.) than they were earlier when we saw a strong bounce after making a low of 5175. With US markets too getting ready to see life without QE2 sometime in June, weakness in World markets may provide sufficient trigger for Nifty Future to breach this support area.
I would like to add that with SBI getting weak, Bank Nifty too has turned weak and has taken shine out of the once most favoured sector. Bank Nifty Future now below 10500 will go to the previous bottom of 10000 and thereafter to 9600 levels.
In view of he foregoing, its time to be cautious at higher levels, as the story of Right Shoulder formation carried in my weekly post since the time top was made around last Diwali, may turnout to be a reality.
Have a nice weekend!
Ketan Asher.
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