NIFTY Weekly price action analysis – 16-September-2011

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Here is the Nifty weekly chart with trend lines, trend channel and swing points marked on it.

Nifty Weekly price action analysis

Nifty Weekly price action analysis

Let’s take a look at NIFTY’s weekly chart and do the analysis based on facts shown by price action-

Bullish reasons -
1) We had weekly Green bar indicating continuation of bullish move in short term.

2) Weekly volume has been very good supporting the upmove. Friday’s daily volume has been one of the highest in last 20 days.

3) Weekly close is above the psychological level of 5000.

Bearish reasons -
1) The week made Lower High and Lower Low compared to last week, indicating weakness.

2) Previous week with range of 226 points was NR7 week (narrowest range in last 7 weeks). This weeks range of 232 is also among the narrower range.  It indicates that market is still in consolidation phase,but sooner or later, we are going to see range expansion and move.

3) Price has dropped from the previous support level of 5177, which acted as resistance on daily chart. The lower high resulted in giving us Swing High point at 5177 which will act as first resistance going forward.

3) Market closed at more or less same level as previous weeks close indicating lack of strength in trend.

Interpretation and possibilities for next week -
As a trader, we have to be prepared to face anything that market throws on us. So lets see what might come in next week.

1) Nearest supply zone was around 5177/5200 level. Market needs to cross this level to show any further sign of strength. Looking at global weakness, it is going to be a challenge.

2) Any break of 5177 level, can easily take market to 5328 level on upside.

3) Volume has been high on last 2 days of the week, indicating that accumulation might be in progress. My tracking of FII flows also giving the sign of short term bottom formation.

4) On first 3 days of this week, market made daily low between 4910 /4920 range. Hence this level will act as support or trend decider in days to come.

5) I will not call it as end of bearish trend. This could very well be a bearish rally. We are still in down trend, global markets are still going down. In such situation, it is better to wait for more confirmation before we call it return of bull market.

Important levels to watch for – For up-move – 5200/5300, For down-move – 4800, 4900. For sideway – 4910 to 5150.

Hope this analysis helps you in forming your own views on market. Feel free to drop your comments on the post. Let me know if you would like to see something more in the analysis.

Disclaimer – These are my views on the market and I could be wrong in reading it. Please use your own judgment and make sensible trading decision based on your own analysis.

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