Dated :- 06. 10. 2014                                 NIFTY SPOT : 7945.55

Hi,

Readers,

Nifty has moved in a small range. Last week was a truncated week and we had only 3 working days before 5 continuous holidays. Traders may well be in a holiday mood. But even then Nifty did not showed much strength and who so ever used sell on rise strategy made money.

Readers must be remembering that I mentioned the importance of 7930 in my previous blog. See, the importance of charts and importance of important levels. In all the 3 trading days in last week after my blog Nifty took support at 7930 (Monday low 7934, Tuesday low 7923, Wednesday low 7936).

Interestingly Nifty did not give a close below 7930 on any single day. Remember it was mentioned that close below 7930 short positions are safe. And till Nifty is closing above 7930 one should be alert and keep the trailing stop loss of 8050 for remaining short position.

Now What:-

Nifty gave a bearish breakdown of double top pattern and standing there. See, double top breakdown after a sustained rally is a bearish breakdown. Effect of it is, that, if it is real breakdown then it forces Nifty to come down. And if does not come down then it is a sign of utmost caution for those who are short in Nifty.

Now the charts are showing that if Nifty does not come down in next two trading days then it is prudent to book full profits in balance of short position in Nifty and step aside. Because in that case Nifty may force a sharp rebound fueled with short covering. There is an old saying that Good Warrior and Good player always understand which side the wind is blowing and which side it is expected to blow. (Hawa ka rukh)

Same applies to a trader wind is trend and chart analysis, when the wind is saying that Nifty should have come down and Nifty is refusing to come down then it means that some force is holding Nifty here.

Wait for maximum two more days if Nifty does not start coming down and does not close at least below 7930, then book complete profits and step aside. In that case Nifty may even take sharp rebound. Once Nifty closes below 7930 further trail the stop loss to 8010 closing basis.