Nifty-Technical View-27-6-14

Nifty closed at 7493.20 on 26-6-2014 

SUPPORT:-  7487.55 / 7477/  7441.60 / 7409 / 7340 / 7263 / 7229/7200

RESISTANCE: 7563.50 / 7593.35 / 7635/ 7663/ 7678.50 / 7700.

Nifty opened weak at 7554.10 and moved down gradually during the day and made a low of 7481.30 before closing the day near the low at 7493.20, today’s move indicate that the ongoing correction can turn deeper as it has broken recent closing bottom of 7493.35 although by .15 points only, however it is still above its bottom of 7441.60 made on 23.6.14 on bar chart but seeing today’s move I don’t think it can hold this bottom. Furthermore the nifty has failed to  sustain above its short term DMA therefore there is good chance of negative divergence to come into play and if it happens then it can take the nifty to 7402 & 7229 level. To give an indication to negate the divergence it has to fulfill the following condition chance of which are looking weak at this point of time.

1.      It has to close above 7580.20 on 27-6-14 on line chart

2.      It has to hold bottom of 7441.60 and cross top of 7593.35 on the bar chart as of now

3.      It has to stay above its short term DMA for a reasonable period of time .The DMA is placed at 7554 for 27-6-14(it keeps on changing every day)

The nifty is having a cluster of moving averages in the range of 7261-7180 therefore  in worst case it is expected to bounce from these levels but if it starts trading below 7180 then it will be  a cause of concern for the  intermediate uptrend .

REMARK:- The chances of deep correction is becoming stronger and nifty coming to the levels of 7230-7350 cannot be ruled out, therefore I suggests to avoid long trades in nifty but one can try short call below 7487 with a stop loss of 7518 for a target of 7440 / 7402 / 7380. Kindly note that make your cost your stop loss in favorable trade and then trail it as the price moves up/down to gain maximum profit and avoid losses.

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