September 5, 2010

  • Bank nifty's week chart remains in a strong up trend as long as it remains in the channel. Channel break may give an early warning.
  • But if the recent high 11126 it will be a continuation breakout and the index will continue the up tend staying inside the channel.
  • But the daily chart if it does not make it to the recent high of 11126 and breaks 10645 will make a lower high which may make the bulls worried.
  • I have also shown the use of indicators in the first chart. Even the most reliable indicators will be tested when the instrument you are dealing with remains in a strong trend. The indicators work well in a sideways market. In this case the stochastic remains in overbought condition for more than a month. But the indicator remaining in overbought condition also shows the strength of the trend. In this case simple trend lines and channels or the trend following methods will be more effective and can give great profits.
  • For next week one can watch the range of 10645 - 11126 if it gets violated take a trade by keeping a small stop loss. 
  • Remember Bank nifty is a volatile instrument if you are in the wrong direction losses can be large as well so please be careful.
  • Last week we had a small bounce in Suzlon energy from oversold levels.
  • But one look at the daily line chart says the story, the stock is in a strong down trend. Trending down below the 200 day moving average.
  • The line chart is also facing strong resistance in the form of a trend line. On closing basis the stock is not even able to cross above this trend line.
  • Ford Motor is showing good momentum on the upside.
  • If the stock moves above 13 one can go long with a small stop loss.
  • If the stock gets resisted at the top of the triangle the stock can still remain inside the pattern with a breakout or breakdown possibility that can take place in the coming weeks.
  • Breakdown from the weekly triangle can create a topping pattern for the stock which can push the stock down for medium term.
  • AT&T Inc has been showing good upward momentum for the past two weeks.
  • The stock has performed well last week along with the major indices.
  • In the weekly chart the stock has closed by hitting an important resistance line. There is a rising support line too. So next week the stock should breakout from the apex of this pattern and give good direction towards the breakout side.
  • Breakout should close above the resistance line towards the high of the day for indicating strength.
  • Dow Jones is showing a triangle formation in its daily chart.
  • Right now a rally towards the top of the triangle is going on.
  • The current up move may find resistance around 10600 where the price will meet the resistance line. 
  • A dip from 10600 towards the support line of the triangle will create a classic triangle breakout set up for Dow Jones industrial average.
  • Triangles are known to give false breakouts. So a false move above 10600 is also possible, This move may not go beyond 10750 where the resistances are strong.
  • S&P 500 WEEKEND UPDATE
  • DOW JONES PULL BACK TRADE

Disclaimer

All the contents of niftychartsandpatterns are for educational purposes only and are not Investment Advice or recommendations offered to any person(s) with respect to the purchase or sale of the stocks / futures. Niftychartsandpatterns shall not be held responsible for the actions of individuals, parties, or corporations taken in response to the ideas, thoughts, concepts or information presented in this blog. Hence all the visitors are requested to apply their prudence and consult their financial or investment adviser before acting on any of the Ideas in this blog.

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My Favourite Quote

"All through time, people have basically acted and reacted the same way in the market as a result of: greed, fear, ignorance, and hope. That is why the numerical formations and patterns recur on a constant basis."
—Jesse Livermore