Sunday, July 11, 2010


Date: 28 May 2010



NIFTY is in a Price Channel (Continuation) Formation Targeting 5475

Main Trend Line: 3rd November 2009 reaction lows (4539) formed the beginning of the main trend line. Subsequent lows 4675 & 4787 in 8th February & 25th May10 confirmed the main trend line.

Channel Line: Once the main trend line was in place, the channel line beginning from the 20th October 2009 high (5181) was drawn. A visual assessment reveals that these trend lines look parallel. The channel line marks resistance in a bullish price channel,
HT1: 5309, HT2: 5399 and HT3 5475*

Bullish Price Channel: Subsequent touches along the main trend line offered good buying opportunities in 2nd week February 2010 and late May 2010.

A Price channel is a bullish continuation pattern in an uptrend. The upper trend line marks Resistance and the lower trend line marks Support. Price channels with positive slopes (up) are bullish. For explanatory purposes, a "bullish price channel" will refer to a channel with positive slope.

Here is the daily chart of Nifty. It is in a Price Channel (Continuation) formation, the main trend line as a support with the prices having touched down to 4787.45 on 25 May 2010. A number of technicians have been watching it form. The advance from this new low and the subsequent pullback is expected in next few weeks. Prices are expected to move in between 5180 to 5480 levels, which is the upward price channel resistance line.

As per the chart shown exponential moving averages are bullish cross over. A bullish crossover occurs when the shorter moving average crosses above the longer moving average. This is also known as a golden cross. The EMA 5 day (4985.70) of the Nifty is cross over the EMA 6 day (4950.20) which means bullish trend will be persists.

As per the Nifty chart, %k crosses over the % D of the stochastic oscillator. The stochastic oscillator is a momentum indicator that uses support and resistance levels. This method attempts to predict price turning points by comparing the closing price of underlying assets to its price range. The stochastic oscillator slow of the Nifty is bounces back from 20 levels (below 20 is over sold levels) and now trading at 40 levels, which means prices are in the bullish momentum.

POSITIONAL CALL (4 weeks TO 8 weeks): BUY S&P NIFTY IN THE RANGE OF 4950-5010 WITH S/L 4800 FOR TARGET1: 5330 AND TARGET2: 5480, CMP 5066.55

Report By: Pradeep Karnani
Research analyst

Mobile: 9966028055

DISCLAIMER: Stock & Commodity trading is a high-risk movement. The above recommendations are based on Technical Analysis. Any major fundamental news or market sentiment can make these levels irrelevant or unsuccessful. The targets and time frame for the same mentioned above are indicative and may vary depending upon the market situation. Receivers are urged to exercise their own judgment in trading. Any action you choose to take in the markets is totally your own responsibility. We (TRUE INFOTEC) will not be liable for any, direct or indirect, consequential or incidental damages or loss arising out of the use of this information. This information is neither an offer to sell nor solicitation to buy any of the commodities mentioned herein the writers may or may not be trading in the securities mentioned.

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