NIFTY SPOT : 8780.35
Hi,
Readers,
Readers would have
seen the power of technical analysis that Nifty has ultimately reached 8730 –
8800 levels and readers would have seen that Nifty is taking resistance between
these levels as it is giving wild and sharp falls during the day from these
levels continuously for the last 2 – 3 days.
Nifty moved up
to 8730-8800 as expected and as was mentioned in my previous blog Dated April
05, 2015 that Nifty is sell on rise and the ideal level is sell Nifty is between
8730-8800.
Now What :-
As a technical
analyst when ever any trade which has the potential to be a good one comes one
should go for it. Because it is the adherence to the strategy which always
brings fruits in this market.
This time also
Nifty is giving an opportunity for the trade at present and if it proves to be
good again then the trade is initiated at almost at the time when Nifty is
virtually at the highest (of the present move).
This time because
of the reasons mentioned later in the blog below the stop losses for the Nifty
sell position is 8996 closing basis. The stop loss this time is wide because of
the volatility and surprise elements mentioned later which may have their say.
Thus one
should manage its risk and quantity in an appropriate manner as per his
appetite and sell Nifty in a scattered manner.
Why sell trade is
justified:-
1.
Nifty after a long time broke
trend line who’s support it was taking constantly.
2.
Both in daily and weekly charts
Nifty is below its trend line in RSI.
3.
Nifty gave a breakdown of
double top and two back to back bearish evening stars pattern on weekly charts.
These are the patterns which do not occur too often.
4.
Nifty has made bearish
engulfing pattern on monthly charts.
5.
Nifty is failing to cross the
upper line of Bollinger band on weekly charts.
In the light of above and some other technical reasons this up move
in Nifty may well be treated as sell on rise with the stop loss of 8996 closing
basis on Nifty spot.
This time
specifically I would like to caution readers that because of the reasons
mentioned below this time the risk of stop loss of 8996 being hit in Nifty are possible.
Bank Nifty can become Joker in the pack and also the culprit of the Stop loss being hit (if at all it
happens) because it has started making some good patterns which can make it
Joker in the pack.
But still since
the trade is good and only +ve surprises that too good ones can hit the stop
loss and nobody can predict surprises one should go ahead with the sell trade
because if the Charts are allowed to have their say then Nifty should not cross
8996 on closing basis.
Reasons and
Risk Factors one should keep in Mind:-
Nifty is
moving in a very volatile manner and surprise good news on India’s Rating
outlook from MOODY’s has also given fuel to the up move. Also our Prime
Minister is on a 9 day visit to France, Germany and Canada from where also some
good news can be expected which may give more fuel to Nifty.
In addition,
we are heading towards the results season and this time specifically we are entering
result season with very low expectations.
So the element of
surprise can only come on the positive side.
I am writing
these positives only to bring in to the notice of the readers that one should
know about the risk elements present while taking the trade. Prudent analysis always
takes into consideration and evaluate the risk factors both visible apparently and
probable while taking any decision.
Thus guys manage
the quantity as per your risk appetite.
And have guts to
sell, Because that is all which is needed at appropriate time.
