CNX-NIFTY—UPDATE FOR THE WEEK STARTING FROM—28-9-15

CNX-NIFTY

Closed  at 7868.50 on 24-9-15.

Support:--7829/7812/ 7759/ 7723 / 7678.50/7667.25/7539.50/7422.

Resistance:- 7890/7907.95/7940—7962/7997/8021.60/8055/8065/ 8091.80.

It had relatively a calm day today considering the settlement day of September-2015 series. It opened flat to negative at 7838.40 and made a low of 7804.10 and thereafter steadily moved up and made a high of 7894.50 before closing the day at 7868.50. Although it did not accelerate the down move after the trend reversal on 22-9-2015 but It is also not showing any major strength either and moving in a short range now. There are some important technical observations which are given here under and the under noted parameters would decide the market movement for the coming week/weeks

TECHNICAL  OBSERVATION

1.Inverse Head & Shoulder pattern is visible on daily bar chart and its neckline is in the range of 8050—60,since it is slopping neckline ,so its count will decrease day by day. But take the said range as valid range and if it moves above this range and sustain then the possible maximum target could be in the range of 8500—8550. This pattern will be negated if it moves below 7660.

2.Distinctly visible Head & shoulder Pattern on the weekly  bar chart and its neckline is in the range of 8040—60.The possible maximum target could be in the range of 6900—6800.(see my earlier post)

3. RSI is showing huge negative divergence on the weekly and monthly chart, which is a bad sign. It has to be reviewed from time to time and seen in sync with the other technical parameters

4.It is below all its long term moving averages and the last being at 8147(it changes every day) for 28-9-2015.So it will only show positive strength if it moves above this mark and sustain.

5.Fresh short term rising trend line support is at  following points(approx) for coming week. Break below this support on given day will give first sign of crack.

    28-9-15—7760 / 29-9-15—7775 / 30-9-15—7796 / 1-10-15—7816.

6. Short term moving average range for 28-9-15 is between 7908—7831.

7.Its recent higher bottom is at 7723.25 made on 23-9-2015.

In view of the above technical observation the broad range for nifty is between 7660---8060 and it is evenly placed now and breakout on either side will decide which way it want to move but in totality the bias is bearish and down move is expected, it will give first crack when the rising trend line is violated and then the recent bottom of 7723.25 is taken out similarly if it moves above 8147(it changes every day) and sustain then it will show strength , but not to forget that the RBI trade policy announcement  is lined up for 29-9-15 and if interest rate cut comes market may react positive for a while, even if it is so it seems that it will be difficult to sustain the expected up move and in all likelihood it is going to give moderate to sharp  down move  after the event. In view of the above it is suggested to keep the trade commitments light till the event is over. The long term trend is still down but it is showing some resilience now ,even then long trader are advised to be extra vigilant and cautious in their trade because they may get trapped at higher level. It is suggested to avoid long trade till more clarity is visible on the chart.

Trading Strategy   

1.Day trader can try long call above 7870 or above 7908 with a stop loss of below 7825 & 7860.It would be slightly safe  to try it above 7908.

2.Short call can be initiated if it moves  below 7812 and sustain with a stop loss of above 7870 or on the rise but below 7940 with a stop loss of above 7980.

 Remark:-The long term trend is still down. In view of RBI’S trade policy announcement trade commitments should be kept light, in fact for safe trader it would be better to stay away from the market till the RBI event is over. However aggressive day trader can initiate trade as suggested above. I would personally avoid long call till it moves above the long term moving average last point and sustain instead I would look for opportunity to initiate short trade now.                                                                                            

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.