S & P NIFTY HISTORY REPEATS ITSELF

Date: 28 May 2010

S & P NIFTY HISTORY REPEATS ITSELF

TECHNICAL OVERVIEW:

S&P NIFTY DAILY CHART

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

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