NIFTY Weekly price action analysis – 2-September-2011

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

Weekly Price Action analysis of NIFTY

Weekly Price Action analysis of NIFTY

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

Bullish reasons -
1) NIFTY has made new swing low at previous weeks low of 4720.

2) Balance price of weekly bar (my fastest trend reversal indicator) has turned bullish in this week for weekly chart.

3) Though the daily volume on Wednesday and Friday have been very high, overall weekly volume was small (due to short trading week).

4) Up move is supported by wide range weekly bar (it is wider then previous week).

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

Bearish reasons -
1) Lower volume in up week is not confirming the strength of bulls.

2) Friday’s daily candle has shown the sell-off soon after market open which lasted for whole day.

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 5000 level. Market has traded above this level and also closed above it.

2) Market has found support at demand zone is around 4700 level and bounced from there. This level will provide good support in any new fall, if it were to come.

3) Volume has been high on last 2 days of the week, indicating that accumulation is in progress.

4) 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 – 4700, 4600. For sideway – 4800 to 5120.

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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