Monday, July 7, 2008

Small Range Between 3940 and 4110

The Nifty opened with a big bang today and soon reached near its earlier pivot high of 4105. The Nifty made four attempts during the day to cross that barrier but it proved to be a very tough resistance. Finally, in the late afternoon trade, after news came in that there was a suicide bomb attack on the Indian embassy in Kabul, the market started falling. It fell pretty sharply for whatever time was left in the session and let the Nifty close with gains of only 14 points during the day.

Nifty 30 minutes Chart - ADX Indicator

Seen above is the 30 minutes chart of the Nifty which shows that the Nifty went through the resistance line with a bang today on opening bell itself but that is where the problems started for Nifty. It reached its previous resistance which happened to be the pivot high formed last week. After trying to go past the resistance for most of the day, the Nifty failed to do so and fell sharply in the afternoon. As shown by the green lines, the Nifty is now in a range between 3940 and 4110. The ADX indicator which is still below 20 will remain at low levels till the Nifty remains within this range. A breakout from this range – either up or down should take the ADX to levels past 30. What is to be noted is that the ADX indicator on the daily charts is still at 51. For the Nifty to change its direction, the ADX should first slow down to levels between 20 and 25 before going up again. A prolonged stay within the range for a few days should do that for the Nifty. For now expect a short term uptrend above 4110 and a short term downtrend below 3940/3850.

I had to go out somewhere and came back late. Since it is now very late in the night, I won’t go into too deep an analysis and just rest my pen here tonight.

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