NIFTY Weekly Wrap: 28-December-2012

Are we getting closer to reversal?

On 13th December 2012, we hinted about reversal. NIFTY made a high of 5965 on December 11, 2012; after that it never touched that level. We also observed that consolidation in NIFTY between 5830-5950. Now it is time to answer whether we are getting closer to reversal or NIFTY is going to make another high.

1. If we observe the daily candlestick pattern two things comes into picture:-

a) DARK CLOUD COVER (a bearish reversal signal.In an uptrend a long white candlestick is followed by a black candlestick that opens above the prior white candlestick's high. It then closes well into the white

candlestick's real body) between 26th and 27th December candles AND

b) HARAMI (a two candlestick pattern in which a small real body holds within the prior session's unusually large real body. The HARAMI implies the immediately preceding trend is concluded and that the bulls and bears are now in a state of truce. The color of the second real body can be white or black. Most often the second real body is the opposite color of the first real body) between 27th and 28th December candles.

2. A consolidation pattern is either followed by preceding trend or reversal of trends take place after consolidation. We get to know about the trends to be followed by appearance of triangles and flags. A closer look at daily pattern gives hints of bearish flag (marked by red lines)

3. Now the study of indicators; Closing price of 5th December 2012 and 26th December 2012 are more or less same. But 26th December RSI is lesser than that of 5th December, this is definitely negative sign until RSI closes higher than that of 26th December's.

Previous week we observed, "here may be some ST corrections in NIFTY which should be used for sell with 5930 as closing SL" and "sell the rise should be the strategy for trading in NIFTY". For trading we must follow developing ST situation also for more profitable trades".

NIFTY made high of 5930.80 but did not close above that level, one should stay short on positional basis.

Stay connected for levels and more.

Wish you happy trading !!

NIFTY Weekly Wrap: 14-December-2012

Last week in our Weekly Wrap we mentioned only downside levels and NIFTY nearly did our third level of 5830. 

This week NIFTY traded in narrow range of 126 points and closed with 28 points loss. Closing above 5 WEMA favors bull although weekly closing was lower than opening. It could not break the channel resistance and support line (please refer to chart). One noticeable thing is developing negative divergence in RSI. Next week closing may confirm the pattern.

In daily chart, NIFTY closes just below 5 DEMA and MACD has given Sell cross. But price should confirm all the observations.

As of now, buy the dips and sell the rise should be strategy for trade in NIFTY until it gives clear breakout in either side.

Please keep watching this space for trading levels in Opening Bell.

Wish you happy trading !!