June 5, 2011

NIFTY Weekend Update

  • First chart shows the much talked about resistance level of 5600 and the bearish engulfing formed on Friday at this level.
  • Next chart shows the possibility of an inverted head and shoulders pattern. But price should not decline more than 5420 - 5430 level for a valid right shoulder to form.
  • For bulls price should stay above 20 day moving average which will keep the bullishness intact and they might try to move towards the 50 DMA.
  • Price is not able to sustain above 38.2% Fib level and the weekly chart shows price rejection from 20 Week moving average.
  • So from the above scenarios we are in a kind of neutral area from were we can move both ways. 
  • Playing long will be easy on a daily close above 5600.
  • Try to stay short below 20 DMA But be cautious with shorts as global markets have sold off and are in oversold territory. So for bears the weakness and the bad fundamental news of global markets should continue.


  1. Sir,
    Please see daily or weakly chart of nifty that is it forming a reverse head and shoulder. 1st shoulder is 6336 to 5690, then head is 6179 to 5178 and 2nd shoulder is 5900 to 5348. Kindly guide me.

  2. @Nilesh
    It is a kind of sloping inverse head and shoulders pattern. But you can put it into a triangle category. I have shown this triangle in my earlier weekly posts.

    Thank You

  3. sir,
    To form the right sholder why the price should not fall more than 5420-5430 level.

  4. @swetha
    If the neck line is a sloping one we can have a scenario like what you are saying. But here the neck line is a horizontal one So the structure will look good only if the right shoulder stops around 5430 - 5440 level. Anything below that will not look good.

    And the first thing that i decide before enter a trade is the stop loss. So i will try to go long from 5450 level with 5420 as stop loss on closing basis