CNX-NIFTY--A TECHNICAL VIEW---14-9-2015

CNX-NIFTY

Closed at 7789.30 on 11-9-15.

Support:--7750/7723/7678.50/7667.25/7539.50/7450-422.

Resistance:-7840/ 7846.05/ 7864.85/7881/7940--7962/7997/8065.

It opened with a up gap at at 7833.80 and went past the stop loss level of 7850 for the short calls (see my post for 11-9-2015) for a while and hit a high of 7864.85 for the day but could not sustain above 7850 mark even for a minute thereafter steadily moved down and made a low of 7759.90 before closing the day 30 points above the low at 7889.30. It exhibited weakness today but price action did not support it completely, furthermore looking at the daily chart pattern and some other technical parameters, it seems that chances of it moving up further are still not over, although weekly and monthly charts are tremendously weak and looking hugely bearish. Therefore there is no doubt that this on- going up move is a pull- back rally and once it get exhausted in all likelihood the recent bottom of 7668.50 & 7539.50 it made on 10-9-15 &8-9-2015 will be taken out in coming days/weeks. But development on the daily chart should not be ignored to catch the day to day market movement in time. There are three reasons why it could move up:-

1.RSI is showing positive divergence on the daily chart, please note that this indicator should be viewed in sync with other technical parameter, which are not supporting it now ,but still you cannot ignore it.

2.It is running above  its lower band of the short term moving averages range which is between 7960—7740(it changes every day).

3. Crossed recent top of 7846.05 and made higher bottom at 7678.50.

 The range for nifty is between 7740—7865 for 14-9-2015 and between 7972—7667 for the month of September-15 and breakout on either side from this range will decide the further price action. Please note that now if it moves above 7865 and sustain then this rally may extend to 7940—7962-8000—8065.before it get exhausted.

Strategy for Short Calls:-

1.Initiate fresh short call if it sustain below 7740 with a stop loss of above 7795 or  near 7865 with a stop loss of above 7895. One can add on position if it sustain below 7708 with a stop loss of above 7730.

2.Those who are still holding short position will have to be alert and take action  keeping the range of  7740—7865 in mind . Therefore if one get a chance of lower price range on 14-9-15 cut the short position near 7740 or 7723 and not below 7723 and re- build the position again if it breaks 7708 and sustain. It is suggested to square short position if it sustain above 7865 for 5—10 minutes similarly re-enter position if it breaks this mark again and sustain below it.

Strategy for Long Calls:-

1.Those who are carrying long calls can hold with a stop loss of below 7740. Avoid fresh long call below 7789.

2. Aggressive day trader can try long call above  7805 with a stop loss of below 7775.

I once again repeat that the pull back rallies shows strength on the face of it but are inherently weak in nature and may end most of the time without giving proper signal, but the price movement has to be respected as it is showing some resilience now and may move up further, even then I would caution long trader to handle their trade vigilantly and with extreme care, because the trend is down and this rally may fizzle out any time.

Remark :- The trend is down and I prefer not to go against the trend, therefore I personally I would not like to take advantage of the remaining  expected up move  instead I would look for opportunity to initiate sell trade.

Please note that profit should also be booked in trade from time to time at the appropriate points so that you can take advantage of the market swings.

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.

Disclaimer:-The view expressed here are solely of the author and he is not at all responsible in any way for the outcome of the trade you enter based on the above view.

Note: Price stated here is of spot market.

Contact me for strategic guidance to enter and exit the trade.