Dated :- 12. 04. 2015

                                                                     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.