Nifty-Technical View For The Week Starting From 04/08/14

NIFTY CLOSED AT 7602.60 ON 1-8-14

Range for the week ended on 1-8-14:- 7799.90--- 7593.90

Range for the month ended on 31^st July –14:-7840.95—7422.15

 SUPPORT: - 7593 / 7563.50 / 7487.50 / 7481.30 / 7447.20/ 7441.60 / 7422.15 / 7206.70.

 RESISTANCE:-7602 / 7662.50 / 7700.05 / 7721.30 / 7731.05 / 7799/90 /  7808.85 / 7840.95 / 7873 / 8060 / 8125.

  (Figures in bold are important)

Nifty opened flat to positive for the week under review but could not cross the previous week’s high of 7840.95 and then gradually moved down and gave a sharp down move on 1-8-14 and made a low for the week at 7593.90 before closing the week near the low point at 7602.60.The entire week’s movement shows great weakness in it and it may head for reasonable to big fall in coming days.

TECHNICAL VIEW

1.      ON DAILY CHART:-It has decisively broken the short term DMA range which is between 7739—7670 for 4-8-14, so the  only hope exist from where it can bounce is 7554 (it changes every day) level for 4-8-14, if it does not hold this level and stays below this then further sharp fall can be expected, therefore nifty has to stay above the lower band of the short term DMA range at least to give some sign of recovery. I suggest avoiding long call completely below 7670 on 4-8-14.

2.      ON WEEKLY CHART:-  It is badly placed on the weekly chart also which is very disturbing. It is below the upper band of the short term DMA range which is between 7615—7199 which shows gross weakness in it and indicate further fall if it stays below this. I suggest avoiding long call below 7602.60 & 7593.90 for the week starting from 4-8-14.

The strong negative divergence are visible and if it comes into play then it could take nifty down to 7229 & 6694.80 levels but as I always say that divergence should be viewed in sync with the moving average placements and since it has decisively broken the averages on the daily chart and the upper band of the average on the weekly chart too therefore chances of divergence coming into play looks very strong. The divergence could only be negated if it bounces back above the short term DMA range on the daily chart. The divergence suggest caution in the long trade.

3.      ON MONTHLY CHART:- The short term DMA upper band exist at 7143. I suggest to avoid long call below 7662.50 & 7721.30  for the month of August-14.

REMARK:- Long term trend is still up, but avoid long calls below 7662.50 and below 7593.90 & 7554 for sure till nifty shows the visible sign of down correction completion. I expect the down correction to last for some time and the possible downside range could be between 7100-7200, therefore  one can try short call on the rise at appropriate levels with an adequate stop loss.

Kindly note that make your cost your stop loss in favorable trade and then trail it as the price move up/down to gain maximum profit and avoid losses. Use support and resistance levels as entry, exit, target and trailing stop loss points. 

DO NOT TRADE WITHOUT STOP LOSS

Note: Price stated here is of spot market

Contact me for strategic guidance to enter and exit the trade