NIFTY Weekly price action analysis – 26-August-2011

This item was filled under [ Traders zone ]

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) Price has found support at Demand zone.

2) This week has given NR5 candle with the range of 245 points. It is not the narrowest, but still  indicates pause in market.

3) Market is oversold after 5 weeks of continuous drop. Historically, we have not seen more than 5 weeks of drop since Sept-Oct 2008 when market dropped for 7 weeks in continuation. That was the end of bear market.

Bearish reasons -
1) Downtrend is still continuing with lower low, lower high and lower close.

2) Friday’s close has been below the range that was set between Monday to Thursday indicating new bearish sign. But the lower volume on Friday does not support this bearish view strongly.

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 is around 5000 level. This is likely to offer resistance as market moves up. This is were highest number of CALLs are also written.

2) Market has found support at demand zone is around 4700 level. I have also marked new horizontal support from April-2011 swing low around 4700 level.

3) Close above 4700 level and extremely oversold market condition also bring point in favour of bulls. Better to wait for market to confirm previous weeks range before buying. Odds are high for Sideway to Up market for next week.

Important levels to watch for – For up-move – 4900, For down-move – 4700, 4600. For sideway – 4700 to 4950.

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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