Sunday, August 17, 2008

Pullback in Nifty Comes a Little More Strongly

The charts haven’t changed much since the last analysis was done on this blog on Wednesday night/Thursday early morning, except that the pullback/fall that we expected came a little more strongly on Thursday. The situation, though, remains the same. We do not know yet whether this is a pullback to the head and shoulders pattern breakout or a pattern failure.

Nifty Daily Chart - Debatable Neckline

Attached above is the daily chart of Nifty, which clearly shows a head and shoulders pattern, a clear breakout and then we are currently witnessing a pullback. As suggested in the last post, it is debatable where the market considers the neckline to be. The neckline could be where we have shown on the chart as the solid green line. It could also very well be near the dashed green line. Or it could as well be anywhere inbetween. This means that the zone between 4430 and 4360 remains a strong support zone. As long as the support of 4360 (levels likely to change with each passing day) is not broken, we should assume this to be just a pullback and not a pattern failure.

I did an analysis of the 30 minutes as well as the 60 minutes chart of the Nifty too but the results were nothing new. The charts don’t tell us anything different and they too suggest a support between 4330 and 4350. Whether or not that support will be broken is difficult to concur right now.

The international front too gives us no triggers. The Dow Jones on Friday ended a tad higher while the London FTSE closed a lot lower. The crude oil, after making a low at $111.30 ended the day at $113.78. All in all, Friday was a mixed day. Except for any major changes in the Asian markets tomorrow morning, the rest of the world triggers would cause no major havoc/euphoria in the Indian markets. The inflation figures were released on Thursday and it was found that inflation jumped to 12.44%, a big rise as compared to what was seen in the past few preceding weeks. Will the markets fall because of that? Well, we can just wait and see what the reaction will be.

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