NIFTY Weekly price action analysis – 29-July-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.

Nifty Price action analysis

Nifty 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 -
Frankly speaking, I am struggling to find any bullish reason on last weeks bar. Only point that I can see is this week made higher high then previous 2 weeks. Even that is not a good sign cause this higher high was immediately rejected and we made the low, lower then last 2 weeks, and closed there.

Bearish reasons -
1) Upmove toward new supply zone around 5700 was tested, and price fell from there.

2) Bearish engulfing bar covering last weeks Inside + Narrow bar.

3) Volume has picked up during this week.

4) Wide range bearish bar showing the strength of bearish move.

After a narrow, inside price action of last week , as anticipated, we have seen the breakout and wide range action. Volume has picked up, that gives strength to this breakout. 5700 level has developed as new supply zone.

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 5700-5750 level. Price has been rejected by this zone in last 5 weeks. Any upmove is likely to face resistance at 5600 and 5700 level.

2)  If new supply enter the market, then we might see continuation of downtrend. Next demand zone is 5300-5250 level. We also have long term trendline from Mar-09 low, in the same zone. So expect some level of buying to emerge.

3) I will be watching the price action near Trendline from Mar-09 low closely. If we see the break of it with wide range, high volume bar, then we will be heading for much lower level. If that doesn’t happen, then we might drift towards the low of channel.

Important levels to watch for – For up-move – 5530, 5650, 5705, For down-move –  5430, 5328, 5200. For sideway – 5700, 5450.

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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